10-K

________________________________________________________________________________

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

þ  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

Commission file number: 1-10864

UnitedHealth Group Incorporated

(Exact name of registrant as specified in its charter)

Minnesota (State or other jurisdiction of incorporation or organization)	41-1321939 (I.R.S. Employer Identification No.)
UnitedHealth Group Center 9900 Bren Road East Minnetonka, Minnesota (Address of principal executive offices)	55343 (Zip Code)

Registrant’s telephone number, including area code:

(952) 936-1300

Securities registered pursuant to Section 12(b) of the Act:

(Title of each class)	(Name of each exchange on which registered)
Common Stock, $.01 Par Value	New York Stock Exchange, Inc.

Securities registered pursuant to Section 12(g) of the Act:

None

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes þ          No o

     Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     o

     The aggregate market value of voting stock held by non-affiliates of the registrant as of March 18, 2002, was approximately $22,769,207,112 (based on the last reported sale price of $74.93 per share on March 18, 2002, on the New York Stock Exchange).*

     As of March 18, 2002, 307,949,440 shares of the registrant’s Common Stock, $.01 par value per share, were issued and outstanding.

     Note that in Part II of this report on Form 10-K, we “incorporate by reference” certain information from our Annual Report to Shareholders for the fiscal year ended December 31, 2001, and in Part III we “incorporate by reference” certain information from our Definitive Proxy Statement for the Annual Meeting of Shareholders to be held on May 15, 2002.

     These documents have been filed with the Securities and Exchange Commission (SEC). The SEC allows us to disclose important information by referring to it in that manner. Please refer to such information.

*  Only shares of common stock held beneficially by directors, executive officers and subsidiaries of the Company have been excluded in determining this number.

TABLE OF CONTENTS

Articles of Amendment to Articles of Incorporation

1998 Broad-Based Stock Incentive Plan

Amended and Resated 1991 Stock and Incentive Plan

Nonemployee Director Stock Option Plan

2001 Executive Savings Plan

Directors' Compensation Deferral Plan

Employment Agreement - Robert J. Sheehy

Portions of the Company's Annual Report

Subsidiaries of the Company

Consent of Independent Public Accountants

Powers of Attorney

Letter re: representations by Arthur Andersen LLP

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business		2
	Introduction		2
	Description of Business Segments		2
	Expansion and Divestiture of Operations		6
	Government Regulation		6
	Marketing		8
	Competition		8
	Employees		9
	Cautionary Statements		9
	Executive Officers of the Registrant		15
Item 2.	Properties		16
Item 3.	Legal Proceedings		16
Item 4.	Submission of Matters to a Vote of Security Holders		17
PART II
Item 5.	Market for Registrant’s Common Equity and Related Stockholder Matters		17
Item 6.	Selected Financial Data		17
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		17
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk		17
Item 8.	Financial Statements and Supplementary Data		17
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		18
PART III
Item 10.	Directors and Executive Officers of the Registrant		18
Item 11.	Executive Compensation		18
Item 12.	Security Ownership of Certain Beneficial Owners and Management		18
Item 13.	Certain Relationships and Related Transactions		18
PART IV
Item 14.	Exhibits, Financial Statement Schedules and Reports on Form 8-K		18
Signatures
Exhibit Index

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PART I

Item 1.     Business

INTRODUCTION

      UnitedHealth Group is a leader in the health and well-being industry, serving more than 38 million Americans. Through our family of businesses, we combine clinical insight with consumer-friendly services and advanced technology to help people achieve optimal health and well-being through all stages of life. Our revenues are derived from premium revenues on insured (risk-based) products, fees from management, administrative and consulting services, and investment and other income. We conduct our business primarily through operating divisions in the following business segments:

•  Uniprise;

•  Health Care Services, which includes our UnitedHealthcare and Ovations businesses;

•  Specialized Care Services; and

•  Ingenix.

      While separate, our businesses remain interrelated as part of our health and well-being enterprise. Our businesses share customers, and in most instances, use common information systems and share administrative services. For a discussion of our results by segment see Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

      UnitedHealth Group Incorporated is a Minnesota corporation incorporated in January 1977. The terms “we,” “our” or the “Company” refer to UnitedHealth Group Incorporated and its subsidiaries. Our executive offices are located at UnitedHealth Group Center, 9900 Bren Road East, Minnetonka, Minnesota 55343; telephone (952) 936-1300. Our home page on the Internet is at www.unitedhealthgroup.com. You can learn more about us by visiting that site.

DESCRIPTION OF BUSINESS SEGMENTS

Uniprise

      Uniprise serves the employee benefit needs of large organizations by developing technology and service-driven solutions tailored to the specific needs of each corporate customer. Uniprise offers consumers access to a wide spectrum of health and well-being products and services. Together with its affiliates, Uniprise’s core business provides comprehensive, integrated health benefit services to multi-location employers with more than 5,000 employees, specializing in large volume transaction management, large-scale benefit design, care management programs and administration for large organizations, and innovative technology solutions designed to manage and control medical care costs, facilitate delivery of care, and transform complex administrative processes into simpler, efficient, high quality automated processes. Uniprise is the business through which large employers can access not only Uniprise services, but also all of UnitedHealth Group’s provider-based medical, insurance and specialty services, with a large variety of funding arrangements. As of December 31, 2001, Uniprise provided services to nearly 300 clients, representing approximately eight million individuals, including approximately 150 of the Fortune 500 companies.

      Uniprise also offers human resources and benefit administration outsourcing services to large organizations, including but not limited to call center services, enrollment services, and defined health benefit and contribution plan support services. Uniprise provides claim and customer services and technological solutions for six independent, or unaffiliated, non-UnitedHealthcare health plans, which serve approximately one million individuals.

      We believe that Internet technology has created a new channel for providing health information and transaction services to consumers, enrollees, physicians and employers. Uniprise has developed industry

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leading Internet applications for physician inquiries and transactions, customer-specific data analysis for employers, and consumer access to personal information and service applications. For example, one of these applications gives employers instant, real-time, online access to add, update or verify employee benefits information at any time. Another application allows consumers to make real-time inquiries into the status and history of their health claims, to view and search for care providers through an on-line provider directory, to view eligibility information and to access health and well-being information tailored to their specific needs and interests.

Health Care Services

      Our Health Care Services segment consists of the UnitedHealthcare and Ovations businesses.

     UnitedHealthcare

      UnitedHealthcare coordinates health and well-being services on behalf of local employers and consumers nationwide. UnitedHealthcare’s products are primarily marketed to small and mid-size employers with up to 5,000 employees. As of December 31, 2001, this business served approximately 7.6 million individuals. As of December 31, 2001, UnitedHealthcare also served approximately 345,000 Medicare individuals in 10 states with Medicare+Choice products and approximately 640,000 Medicaid eligible individuals in 11 states. With some of these product offerings, UnitedHealthcare assumes the risk of both medical and administrative costs for its members in return for premium revenue. UnitedHealthcare offers its products through subsidiaries that are usually licensed as health maintenance organizations (“HMOs”), preferred provider organizations (“PPOs”) or insurers, depending upon state regulations. It also provides administrative and other management services to health plans and self-funded customers for which UnitedHealthcare receives a fee, as it does not assume the risk of health care costs.

      UnitedHealthcare arranges for access to care through more than 360,000 physicians and 3,100 hospitals across the United States. The consolidated purchasing power represented by the individuals UnitedHealthcare serves makes it possible for UnitedHealthcare to contract for cost-effective access to a large number of conveniently located care providers. Through its family of companies, UnitedHealthcare offers:

•  A broad range of benefit plans integrating medical, ancillary and alternative products so customers can choose what is right for them;

•  Access to broad and diverse numbers of health care providers, including benefit plans that give customers direct access to specialists without obtaining referrals;

•  Innovative programs that facilitate integrated care delivery;

•  Convenient self-service for customer transactions, pharmacy services and health information;

•  Clinical information that physicians can use in working with their patients;

•  Simplified electronic transactions for customers; and

•  Economic benefits of the purchasing power of millions of people.

      We believe that UnitedHealthcare’s history of innovation distinguishes its product offerings from the competition. UnitedHealthcare designs consumer-oriented health benefits and services that value individual choice and control in accessing health care. One of the goals is to make it easier for people to get the care they need, when they need it. UnitedHealthcare has programs that provide health education; admission counseling before hospital stays; care advocacy to help avoid delays in patients’ stays in the hospital; support for individuals at risk of needing intensive treatment; continuous coordination for people with chronic conditions; and prescription drug management, which promotes safe use of medications. We want consumers to be engaged and active participants in managing their own health and well-being. For example, UnitedHealthcare’s multi-layered pharmacy benefit program provides access to a wide range of generic and brand-name drugs. Individuals who choose to use generic drugs pay less, while those who

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prefer to use brand-name drugs pay more. Our agreement with Merck Medco Managed Care L.L.C. is an important part of this program. In addition, UnitedHealthcare was an early leader in offering open access products, which allow individuals to schedule appointments directly with specialists without a referral from a primary care physician. Further, UnitedHealthcare offers Web sites that enable access to a variety of information, including a directory of network physicians and hospitals, reports on thousands of health topics and a health profile tailored to individual interests.

     Ovations

      Ovations helps Americans in the second half of life address their unique needs for preventative and acute health care services, deal with chronic disease and respond to specialized issues relating to their overall well-being. Ovations is one of the few enterprises fully dedicated to this market segment. As a part of this business, in January 1998, we began a 10-year partnership with AARP, the nation’s largest organization for older Americans, and currently provide Medicare supplement and hospital indemnity insurance to more than 3.5 million AARP members. Ovations expanded services by instituting AARP Eye Health Services, which offers affordable eye exams, complimentary glaucoma screenings and discounts on eyewear to AARP members. In addition, Ovations’ Medicare Supplement Pharmacy Service addresses one of the most significant cost problems facing older Americans — prescription drug costs, providing AARP members cost-savings and greater access to prescription drugs and health and well-being products. Ovations also developed an offering with lower cost Medicare supplement coverage that provides consumers with a hospital network and 24-hour access to health care information from nurses. In June 2001, Ovations expanded its service relationship with AARP to include AARP Pharmacy Services, the country’s largest pharmacy discount card program, offering prescription drugs, over-the-counter products and drug store products through a retail network and mail order service. AARP Pharmacy Services is part of Ovations’ health and well-being division, which provides consumers with access to health care products, services and supporting health information. In February 2002, Ovations expanded its AARP Nurse HealthLine Services to cover beneficiaries of all AARP Medicare products, providing 24-hour access to health information from nurses. Ovations, through its licensed affiliates, provides its products and services in all 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands.

      The Evercare® division of Ovations provides a broad spectrum of health care services to older Americans. In February 2001, EverCare merged its operations with those of Lifemark Corporation to become the one of the nation’s leaders in offering complete, individualized care-planning, care coordination and care benefits for aging, vulnerable and chronically ill individuals living on their own, in community-based settings and in nursing facilities. Through Medicare, Medicaid and private-pay long-term care products and programs, EverCare is dedicated to enhancing the quality of life and maximizing well-being for this unique population, while preserving financial resources and ultimately minimizing associated costs. EverCare offers a continuum of services through innovative programs such as EverCare Choice, EverCare Select and EverCare Connections. EverCare Choice is a Medicare product that offers enhanced medical coverage to frail, elderly and chronically ill populations in both nursing homes and community settings. These services are provided primarily through nurse practitioners, physicians’ assistants and physicians. EverCare Select is a Medicaid, long-term health care product for elderly, physically disabled and other needy individuals. EverCare Connections is a comprehensive eldercare service program providing service coordination, consultation, underwriting support services, claim management and information and resources linkage nationwide.

Specialized Care Services

      Specialized Care Services is a portfolio of specialized health and well-being companies, each serving a specific market need with a unique blend of benefits, provider networks, services and resources. Specialized Care Services is uniquely positioned to provide comprehensive products and services that are focused on highly specialized health care needs such as mental health and chemical dependency, employee assistance, organ transplants, vision and dental services, chiropractic services, life insurance, health related information and other health and well-being services. These offerings are sold directly to employers and consumers and

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indirectly through other UnitedHealth Group businesses, as well as through unrelated entities, including HMOs, PPOs, insurers, reinsurers, third-party administrators (“TPAs”), labor unions and state and federal government customers. Our products and services include both risk-based products, in which we assume financial responsibility for health care costs, and management and administrative service fees. Most of our businesses operate on a national scale and are subject to the economic and regulatory conditions of various states and regions.

      Through United Behavioral Health (“UBH”) and its affiliated companies, we provide behavioral health care benefit services, employee assistance programs and psychiatric disability benefit services. UBH’s care management staff and extensive network of contracted mental health professionals represent the core of its product offerings. UBH’s services and products reach over 22 million individuals.

      Optum® provides health information assistance, support and related services all designed to improve the health and well-being of the approximately 19 million individuals it serves. Through multiple access points, including the Internet, telephone, audio tapes, print and in-person consultations, we help consumers address daily living concerns, make informed health care decisions and become more effective health care consumers.

      Dental Benefit Providers (“DBP”) and its affiliates provide management services for dental care benefits. Through an extensive relationship with contracted dental providers, DBP and its affiliates manage dental benefit offerings for approximately three million individuals. DBP’s products are distributed primarily through unaffiliated HMOs and insurers to commercial, Medicare and Medicaid populations. DBP also offers its products and services to and through UnitedHealth Group affiliates and has expanded its offering of both network based and indemnity dental care plan designs.

      United Resource Networks (“URN”) is the gateway to highly specialized critical care programs at more than 55 of the most widely recognized medical centers in the United States. URN negotiates fixed, competitive rates for high-cost, complex health care services. Access to URN’s programs and services is available to over 2,200 payers representing approximately 40 million individuals.

      National Benefit Resources (“NBR”) is a managing general underwriter that originates and administers medical stop loss insurance provided to employers with self-funded employee benefit plans. NBR markets stop loss coverage primarily through over 250 third party administrators located throughout the United States. NBR distributes to its customer base certain products and services of other Specialized Care Services’ businesses, including those of URN and Optum.

      Spectera Inc. represents Specialized Care Services’ operating platform for the vision care market. Spectera and its licensed subsidiaries specialize in building vision care benefit partnerships with physicians, employer groups and benefit consultants. Spectera administers vision benefits for more than six million individuals through more than 1,400 employer groups. Spectera provides comprehensive vision care services through its national network of more than 9,700 private doctors’ offices and retail store locations. In addition, our vision business enhances the value of existing vision benefits through coordinating the delivery of vision care services and ophthalmic materials for UnitedHealthcare customers.

      American Chiropractic Network, Inc. (“ACN”), provides consumers with access to networks of chiropractic, physical therapy and other complementary and alternative health care services as well as selected health care products.

      Specialized Care Services also manages units that market the sale of group life and accident insurance to small and medium-sized employer groups.

INGENIX

      Our Ingenix businesses are leaders in the field of health care data and information, research, analysis and application. Ingenix serves multiple health care market segments on a business-to-business basis, including pharmaceutical companies, health insurers and other payers, physicians and other health care

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providers, large employers and government agencies. Ingenix maintains two primary operating divisions: Ingenix Health Intelligence and Ingenix Pharmaceutical Services.

      Ingenix Health Intelligence offers three broad types of products and services: data and software products and services, consulting and publishing services. Ingenix Health Intelligence provides a wide variety of data and software services and products, including databases for benchmarking and reimbursement methodology development, software to analyze and report costs and utilization of services, data management services, HEDIS reporting, fraud and abuse detection and prevention services, claims editing software and reimbursement systems audits. The consulting services business focuses on actuarial and financial disciplines, product development, provider contracting and medical policy and management. Ingenix Health Intelligence also publishes print and electronic media products that provide information regarding coding, reimbursement, billing, compliance and other general health care issues.

      Ingenix Pharmaceutical Services offers product development and marketing-related services for pharmaceutical, biotechnology and medical device manufacturers on a global basis. Ingenix Pharmaceutical Services provides global clinical research services including strategic planning, research protocol development, investigator identification and training, patient recruitment, regulatory assistance, project management, data management and biostatistical analysis, quality assurance and medical writing. Ingenix Pharmaceutical Services addresses “real world” product questions through economic and outcomes research, safety and research and patient registries. Ingenix Pharmaceutical Services also provides medical education and communications through scientific publications, medical symposia and interactive web-based technologies.

EXPANSION AND DIVESTITURE OF OPERATIONS

      We continually evaluate expansion opportunities and, in the normal course of business, often consider whether to sell certain businesses or stop offering certain products or services. Expansion opportunities may include acquiring businesses that are complementary to our existing operations. During 2001, we completed several acquisitions and ceased offering some products in certain markets, all as part of our ongoing emphasis on our strategic focus. Further, we devote significant attention to internally developing new products and services in the health and well-being sector as we have broadly defined it.

      If we were to make any particular acquisition, it may affect our ability to integrate and manage our overall business effectively. Integration activities relating to acquisitions may increase costs, affect revenue and earnings growth and adversely affect our financial results.

GOVERNMENT REGULATION

      Most of our health and well-being services are heavily regulated. This regulation can vary significantly from jurisdiction to jurisdiction. Federal and state regulatory agencies generally have discretion to issue regulations and interpret and enforce laws and rules. Changes in applicable laws and regulations are continually being considered, and the interpretation of existing laws and rules also may change periodically. These revisions could affect our operations and financial results. Enactment of federal and state health benefit laws and regulations can also affect our businesses. Examples of such laws and regulations include: health plan liability laws; physician and provider prompt pay laws; data privacy; mandated benefits; limits on contractual terms with physicians and other health care providers, including audit, payment and termination provisions; implementation of a mandatory third party review process for coverage denials; and other laws and limits on utilization management and restrictions on our ability to carve out certain categories of risk, such as acts of terrorism. Further, as our businesses continue to implement their e-commerce initiatives, uncertainty surrounding the regulatory authority and requirements in this area will make compliance an important focus.

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Federal Programs

      Our Health Care Services segment, which includes UnitedHealthcare and Ovations, has Medicare+Choice contracts that are regulated by the Centers for Medicare and Medicaid Services (“CMS”). CMS has the right to audit such health plans in order to determine each plan’s compliance with CMS’ contracts and regulations and the quality of care being given to members. The significant level of regulations surrounding Medicare and Medicaid makes compliance in this product line a continuing challenge. Our Health Care Services segment also has Medicaid and State Children’s Health Insurance Program contracts that are subject to federal and state regulation regarding services to be provided to Medicaid enrollees, payment for those services, and other aspects of these programs. We believe we are in compliance in all material respects with these regulations.

State Regulation

      All of the states in which our subsidiaries offer insurance and HMO products regulate the activities of those products and operations. Most states require periodic financial reports and impose minimum capital or restricted cash reserve requirements. Many of UnitedHealthcare’s health plans and each of our insurance subsidiaries are regulated under state insurance holding company regulations. Such regulations generally require registration with the state department of insurance and the filing of reports that describe capital structure, ownership, financial condition, certain inter-company transactions and general business operations. Some state insurance holding company laws and regulations require prior regulatory approval or, in some circumstances, prior notice of acquisitions and material inter-company transfers of assets, as well as transactions between the regulated companies and their parent holding companies or affiliates. In addition, some of our subsidiaries or products may by subject to PPO, managed care organization (“MCO”) or third party administrator (“TPA”) related regulations and licensure requirements. These regulations differ greatly from state to state, but generally contain network, contracting, financial and reporting requirements. Many states also have enacted laws and/or adopted regulations governing utilization review and external appeals activities, and these laws may apply to some of our operations. Additionally, there are laws and regulations that set specific standards for delivery of services, prompt payment of claims, confidentiality of consumer health information and covered benefits and services. To date, these various laws and regulations have not materially affected our financial position or results of operations.

HIPAA

      The administrative simplification provisions of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) apply to both the group and individual health insurance markets, including self-funded employee benefit plans. Covered entities must be compliant with standards for electronic transactions and code sets by October 2002, and with standards for privacy of protected health information by April 2003. New standards for health information security and national provider and employer identifiers are currently being developed by regulators. We are in the process of updating our business practices to comply with these standards. We plan to be in material compliance by the enforcement dates; however, the law is far-reaching and complex and the government’s delay in providing guidance may affect the timeliness of our compliance efforts. Additionally, different approaches to HIPAA’s provisions and varying enforcement philosophies in the different states may adversely affect our ability to standardize our products and services across state lines.

ERISA

      The Employee Retirement Income Security Act of 1974, as amended (“ERISA”), regulates how goods and services are provided to or through certain types of employer-sponsored health benefit plans. ERISA is a complex set of laws and regulations that is subject to periodic interpretation by the United States Department of Labor (“DOL”) as well as the federal courts. ERISA places controls on how our business units may do business with employers who sponsor employee benefit health plans, particularly those that maintain self-funded plans. New ERISA claim regulations, effective July 2002, require changes

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to operations and may lead to increased litigation activity. We plan to be in material compliance with the new regulations by the enforcement dates.

Fraud and Abuse

      The regulations and contractual requirements applicable to participants in federal government health care programs such as Medicare and Medicaid are complex and changing. We have re-emphasized our regulatory compliance efforts for these programs, but ongoing vigorous law enforcement and the highly technical regulations mean that compliance efforts in this arena will continue to require significant resources. Additionally, states have also begun to focus their anti-fraud efforts on insurance companies and health maintenance organizations. Some states now require filing and approval of anti-fraud plans and may monitor compliance as part of any market conduct examination.

Audits and Investigations

      We are regularly subject to governmental audits, investigations and enforcement actions. Any such government actions can result in assessment of damages, civil or criminal fines or penalties, or other sanctions, including loss of licensure or exclusion from participation in government programs. In addition, a state department of insurance or other state or federal authority (including CMS, the Office of the Inspector General and state attorneys general) may from time to time begin a special audit of one of our health plans, our insurance plans and products or one of our other operations regarding issues such as utilization management; financial, eligibility or other data reporting; prompt claims payment; or coverage of medically necessary care, including emergency room care. We are currently involved in various governmental investigations, audits and reviews. These include routine, regular and special investigations, audits and reviews by CMS, state insurance departments and state attorneys general, the Office of Personnel Management, the Office of the Inspector General and U.S. Attorneys. We do not believe the results of any of the current investigations, audits or reviews, individually or in the aggregate, will have a material adverse effect on our financial position or results of operations.

International Regulation

      Our Ingenix and UnitedHealthcare segments both have limited international operations. As of December 31, 2001, Ingenix had provided services to customers for trials occurring in over 40 countries, and UnitedHealthcare’s international division operated health companies or offered consulting services in nine markets around the world. These international operations are subject to different legal and regulatory requirements in local jurisdictions, including various tax, tariff and trade regulations, as well as employment, intellectual property and investment rules and laws.

MARKETING

      Our marketing strategy is defined and coordinated by each business’ dedicated marketing staff. Within these segments, primary marketing responsibility generally resides with a marketing leader and a direct sales force. In addition, several of the segments also rely upon independent insurance agents and brokers to sell some of their products. Marketing efforts also include public relations efforts and advertising programs that may use television, radio, newspapers, magazines, billboards, direct mail and telemarketing.

COMPETITION

      As a diversified health and well-being services company with a scope that extends far beyond the boundaries of traditional managed health care companies, we operate in highly competitive markets. Our competitors include managed health care companies, insurance companies, health care providers which have formed networks to directly contract with employers and various information and consulting companies. New entrants into the markets in which we compete as well as consolidation within these markets also contribute to this competitive environment. We believe that the principal competitive factors

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affecting us and the sales and pricing of our products and services include product innovation, consumer satisfaction, the level and quality of products and services, network capabilities, price, market share, product distribution systems, efficient administration operations, financial strength and marketplace reputation.

      We believe that our competitive strengths include the customer focus resulting from our operational realignment. Each UnitedHealth Group business represents a strategic platform from which we can penetrate more deeply into specific markets. These businesses are anchored in a common pursuit of improved health and well being, exploiting three core competencies: network management, knowledge and information and service infrastructure. Other strengths include the breadth and quality of our products, our geographic scope and diversity, our effective use of proprietary tools and products to coordinate and facilitate programs designed to realize appropriately lower health care costs, our disciplined underwriting and pricing practices and staff, our significant market position in certain geographic areas, the strength of our distribution network, our financial strength, our generally large provider networks that provide more consumer choice and minimize barriers to access our point-of-service products and our strong marketplace reputation. However, in some markets we may be at a disadvantage for a number of reasons, including competitors with more resources, longer operating histories, larger market shares, broader networks, narrower networks (which may allow greater cost control and lower prices) or more established names and reputations. These competitive factors could adversely affect our business and operating results.

EMPLOYEES

      As of December 31, 2001, we employed approximately 30,000 individuals. The Company believes its employee relations are good.

CAUTIONARY STATEMENTS

      The statements contained in this Annual Report on Form 10-K and the Management’s Discussion and Analysis of Financial Condition and Results of Operations and other sections of our Annual Report to Shareholders incorporated by reference in this document, include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). When used in this Annual Report on Form 10-K and in future filings by the Company with the Securities and Exchange Commission, in our press releases, presentations to securities analysts or investors, and in oral statements made by or with the approval of one of our executive officers, the words or phrases “believes,” “anticipates,” “intends,” “will likely result,” “estimates,” “projects” or similar expressions are intended to identify such forward-looking statements. Any of these forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially from the results discussed in the forward-looking statements.

      The following discussion contains certain cautionary statements regarding our business that investors and others should consider. This discussion is intended to take advantage of the “safe harbor” provisions of the PSLRA. Except to the extent otherwise required by federal securities laws, in making these cautionary statements, we are not undertaking to address or update each factor in future filings or communications regarding our business or operating results, and are not undertaking to address how any of these factors may have caused results to differ from discussions or information contained in previous filings or communications. In addition, any of the matters discussed below may have affected our past, as well as current, forward-looking statements about future results. Any or all forward-looking statements in this report, in the 2001 Annual Report and in any other public statements we make may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Many factors discussed below will be important in determining future results. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially from those expressed in our communications.

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Health Care Costs

      We use a large portion of our premium revenues to pay the costs of health care services or supplies delivered to our customers. Total health care costs are affected by the number of individual services rendered and the cost of each service. Much of our premium revenue is priced before services are delivered and the related costs are incurred, usually on a prospective annual basis. Although we base the premiums we charge on our estimate of future health care costs over the fixed premium period, inflation, regulations and other factors may cause actual health care costs to exceed what was estimated and reflected in premiums. These factors may include increased use of services, increased cost of individual services, catastrophes, epidemics, the introduction of new or costly treatments, new mandated benefits or other regulatory changes, insured population characteristics and seasonal changes in the level of health care use. In addition, the financial results we report for any particular period include estimates of costs incurred that have not yet been reported to us. Because of these estimates, our earnings may be adjusted later to reflect the actual costs. Relatively small changes in medical costs as a percentage of premium revenues and our ability to properly estimate future health care costs over fixed premium periods can create significant changes in our financial results because of the relatively narrow margins of our insurance products.

Industry Factors

      The managed care industry receives significant negative publicity and has been the subject of large jury awards. This publicity has been accompanied by litigation, legislative activity, regulation and governmental review of industry practices. These factors may adversely affect our ability to market our products or services, may require us to change our products and services, and may increase the regulatory burdens under which we operate, further increasing our costs of doing business and adversely affecting our profitability.

Competition

      In many of our geographic or product markets, we compete with a number of other entities, some of which may have certain characteristics or capabilities that give them a competitive advantage. We believe the barriers to entry in these markets are not substantial, so the addition of new competitors can occur relatively easily, and consumers enjoy significant flexibility in moving to new providers of health and well-being services. Certain of our customers may decide to perform for themselves functions or services we provide, which would decrease our revenues. Certain of our contracted physicians and other health care providers may decide to market products and services to our customers in competition with us. In addition, significant merger and acquisition activity has occurred in the industry in which we operate as well as in industries that act as suppliers to us, such as the hospital, physician, pharmaceutical, medical device and health information systems industries. To the extent that there is strong competition or that competition intensifies in any market, our ability to retain or increase customers or contracted physicians and other health care providers, or maintain or increase our revenue growth, pricing flexibility, control over medical cost trends and marketing expenses may be adversely affected.

AARP Contract

      Under our long-term contract with AARP, we provide Medicare Supplement and Hospital Indemnity health insurance and other products to AARP members. As of December 31, 2001, our portion of AARP’s insurance program represented approximately $3.5 billion in annual net premium revenue from approximately 3.5 million AARP members. The success of our AARP arrangement depends, in part, on our ability to service these customers, develop additional products and services, price the products and services competitively, and respond effectively to federal and state regulatory changes. Additionally, events that adversely affect AARP or one of its other business partners for its member insurance program could have an adverse effect on the success of our arrangement with AARP.

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Medicare Operations

      In response to medical cost increases that exceeded Medicare program reimbursement rate growth, we have withdrawn our Medicare+Choice product offerings from a number of counties and filed significant benefit adjustments in other counties. These and other actions have reduced Medicare+Choice enrollment and may result in further withdrawals of Medicare+Choice product offerings, when and as permitted by our contracts with the CMS. We are precluded from re-entering the counties from which we have withdrawn our Medicare+Choice product offerings until two years after the effective date of withdrawal.

      We will continue to offer Medicare+Choice products in economically viable markets and are exploring alternative arrangements to provide health benefits to seniors. However, the financial results of our Medicare+Choice operations depend on a number of factors, including future Medicare program reimbursement increases, government regulations, benefit design, physician and other health care provider contracting and other factors. There can be no assurance that our Medicare+Choice operations will be profitable in future periods.

Government Programs and Regulation

      Our business is heavily regulated domestically at the federal, state and local levels and internationally. The laws and rules governing our business and interpretations of those laws and rules are subject to frequent change. Broad latitude is given to the agencies administering those regulations. Existing or future laws and rules could force us to change how we do business, restrict revenue and enrollment growth, increase our health care and administrative costs and capital requirements, and increase our liability in federal and state courts for coverage determinations, contract interpretation and other actions. We must obtain and maintain regulatory approvals to market many of our products. Delays in obtaining or failure to obtain or maintain these approvals could adversely affect our revenue or could increase our costs. We participate in federal, state and local government health care coverage programs. These programs generally are subject to frequent change, including changes that may reduce the number of persons enrolled or eligible, reduce the amount of reimbursement or payment levels, or increase our administrative or health care costs under such programs. Such changes have adversely affected our financial results and willingness to participate in such programs in the past and may also do so in the future.

      State legislatures and Congress continue to focus on health care issues. Congress is considering Patients’ Bill of Rights legislation that, if adopted, could fundamentally alter ERISA’s treatment of liability for noncompliance, fiduciary breach of contract and improper benefit coverage denials. Other bills and regulations at state and federal levels may affect certain aspects of our business including physician and other health care provider contracting, claim payments and processing, confidentiality of health information and government-sponsored programs. While we cannot predict if any of these initiatives will ultimately become binding law or regulation, or if enacted, what their terms will be, their enactment could increase our costs, expose us to expanded liability, require us to revise the ways in which we conduct business or put us at risk for a loss of business to new health care funding arrangements. Further, as our businesses continue to implement their e-commerce initiatives, uncertainty surrounding the regulatory authority and requirements in this area will make it difficult to ensure compliance.

      We are also subject to various governmental reviews, audits and investigations. Such oversight could result in the loss of licensure or the right to participate in certain programs, or the imposition of civil or criminal fines, penalties and other sanctions. In addition, disclosure of any adverse investigation or audit results or sanctions could damage our reputation in various markets and make it more difficult for us to sell our products and services. We are currently involved in various governmental investigations, audits and reviews. These include routine, regular and special investigations, audits and reviews by the CMS, state insurance departments and state attorneys general, the Office of Personnel Management, the Office of the Inspector General and U.S. Attorneys. We do not believe the results of any of the current investigations, audits or reviews, individually or in the aggregate, will have a material adverse effect on our financial position or results of operations.

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      Our operations are conducted through our wholly owned subsidiaries, which include health maintenance organizations and insurance companies. These companies are subject to state regulations that, among other things, may require the maintenance of minimum levels of statutory capital, as defined by each state, and may restrict the timing and amount of dividends and other distributions that may be paid to their respective parent companies. Generally, the amount of dividend distributions that may be paid by our regulated subsidiaries, without prior approval by state regulatory authorities, is limited based on the subsidiary’s level of statutory net income, statutory capital and surplus.

Physician, Hospital and Other Health Care Provider Relations

      One of the significant techniques we use to contain health care costs and facilitate care delivery is contracting with physicians, hospitals and other health care providers. Because our health plans are geographically diverse and most of those health plans contract with a large number of these providers, we believe our aggregate exposure to provider relations issues is limited. A number of organizations are advocating for legislation that would exempt certain of these providers from federal and state antitrust laws, the adoption of which could affect this assessment. In any particular market, these providers could refuse to contract, demand higher payments, or take other actions that could result in higher health care costs, less desirable products for customers or difficulty meeting regulatory or accreditation requirements. In some markets, certain providers, particularly hospitals, physician/hospital organizations or multi-specialty physician groups, may have significant market positions or near monopolies.

Litigation and Insurance

      We may be a party to a variety of legal actions that affect any business, such as employment and employment discrimination-related suits, employee benefit claims, breach of contract actions, tort claims, shareholder suits, including securities fraud, and intellectual property related litigation. In addition, because of the nature of our businesses, we are routinely party to a variety of legal actions related to the design, management and offerings of our services. These matters include: claims related to health care benefits coverage; medical malpractice actions; allegations of anti-competitive and unfair business activities; disputes over compensation and termination of contracts including those with physicians and other health care providers; disputes related to our administrative services, including actions alleging claim administration errors and failure to disclose rate discounts and other fee and rebate arrangements; disputes over benefit copayment calculations; claims related to disclosure of certain business practices; and claims relating to customer audits and contract performance. In 1999, a number of class action lawsuits were filed against us and virtually all major entities in the health benefits business. The suits are purported class actions on behalf of certain customers and physicians for alleged breaches of federal statutes, including ERISA and the Racketeer Influenced Corrupt Organization Act (“RICO”). While we believe these suits against us are without merit and we intend to defend our position vigorously, we will incur expenses in the defense of these matters and we cannot predict their outcome.

      Recent court decisions and legislative activity may increase our exposure for any of these types of claims. In some cases, substantial non-economic, treble or punitive damages may be sought. We currently have insurance coverage for some of these potential liabilities. Other potential liabilities may not be covered by insurance, insurers may dispute coverage, or the amount of insurance may not be enough to cover the damages awarded. In addition, certain types of damages, such as punitive damages, may not be covered by insurance and insurance coverage for all or certain forms of liability may become unavailable or prohibitively expensive in the future.

Information Systems

      Our businesses depend significantly on effective information systems. Our information systems require an ongoing commitment of significant resources to maintain and enhance existing systems and develop new systems to keep pace with continuing changes in information processing technology, evolving industry and regulatory standards, and changing customer preferences. For example, the administrative simplification provisions of HIPAA and the Department of Labor’s ERISA claim processing regulations may require

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changes to current systems. In addition, we obtain significant portions of our systems-related or other services or facilities from independent third parties, which may make our operations vulnerable to such third parties’ failure to perform adequately. As a result of our acquisition activities, we have acquired additional systems and have been taking steps to reduce the number of systems and have upgraded and expanded our information systems capabilities. Failure to maintain effective and efficient information systems could cause the loss of existing customers, difficulty in attracting new customers, issues in determining medical cost estimates, customer and physician and other health care provider disputes, regulatory problems, increases in administrative expenses or other adverse consequences.

Data and Proprietary Information

      Many of our products and services depend significantly on the integrity of the data on which they are based. If the information contained in our databases were found or perceived to be inaccurate, or if such information were generally perceived to be unreliable, commercial acceptance of our database-related products would be adversely and materially affected. Furthermore, the use of individually identifiable data by our businesses is regulated at international, federal, state and local levels. These laws and rules are changed frequently by legislation or administrative interpretation. These restrictions could adversely affect revenues from certain of our products or services and, more generally, affect our business, financial condition and results of operations.

      There are various recently adopted state laws that address the use and maintenance of individually identifiable health data. Most enact privacy provisions from the federal Gramm-Leach-Bliley Act. Additionally, new federal regulations promulgated pursuant to HIPAA are now effective with compliance required by April 2003. Compliance with these proposals and new regulations could result in cost increases due to necessary systems changes and the development of new administrative processes and may impose further restrictions on our use of patient identifiable data that is housed in one or more of our administrative databases. The success of our knowledge and information-related businesses also depends significantly on our ability to maintain proprietary rights to our databases and related products. We rely on our agreements with customers, confidentiality agreements with employees, and our trade secrets, copyrights and patents to protect our proprietary rights. We cannot assure that these legal protections and precautions will prevent misappropriation of our proprietary information. In addition, substantial litigation regarding intellectual property rights exists in the software industry, and we expect software products to be increasingly subject to third-party infringement claims as the number of products and competitors in this industry segment grows. Such litigation could have an adverse effect on the ability of our businesses to market and sell products and services and on our financial condition and results of operations.

Administration and Management

      Efficient and cost-effective administration of our operations is essential to our profitability and competitive positioning. While we manage expenses, staff-related and other administrative expenses may increase from time to time due to business or product start-ups or expansions, growth or changes in business or the mix of products purchased by customers, acquisitions, regulatory requirements or other reasons. Unanticipated expense increases may adversely affect our financial results. Further, we believe we currently have an experienced, capable management and technical staff. The market for management and technical personnel, including information systems professionals, in the health care industry is very competitive. Loss of certain key employees or a number of managers or technical staff could adversely affect our ability to administer and manage our business.

Marketing

      We market our products and services through both employed sales people and independent sales agents. Although we have many sales employees and agents, the departure of certain key sales employees or agents or a large subset of these individuals could impair our ability to retain existing customers. In addition, certain of our customers or potential customers consider our debt ratings, accreditation or certification by various private or governmental bodies or rating agencies necessary or important. Certain of

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our health plans or other business units may not have obtained or maintained, or may not desire or be able to obtain or maintain, such ratings, accreditation or certification, which could adversely affect our ability to obtain or retain business with these customers.

Acquisitions and Dispositions

      We have an active ongoing acquisition and disposition program under which we may engage in transactions involving the acquisition or disposition of assets, products or businesses, some or all of which may be material. These transactions may entail certain risks and uncertainties and may affect ongoing business operations because of unknown liabilities, unforeseen administrative needs or increased efforts to integrate the acquired operations. Failure to identify liabilities, anticipate additional administrative needs or effectively integrate acquired operations could result in reduced revenues, increased administrative and other costs and customer dissatisfaction.

Terrorist Attacks

      The terrorist attacks launched on September 11, 2001, the war on terrorism, the threat of future acts of terrorism and the related concerns of customers and providers have negatively affected, and may continue to negatively affect, the U.S. economy in general and our industry specifically. Depending on the government’s actions and the responsiveness of public health agencies and insurance companies, future acts of terrorism and bio-terrorism could adversely affect our Company through, among other things, increased use of health care services including, without limitation, hospital and physician services, ancillary testing and procedures, increased prescriptions for certain drugs, mental health and other services; loss of membership as a result of lay-offs or other reductions of employment; adverse effects upon the financial condition or business of employers who sponsor health care coverage for their employees; disruption of our information and payment systems; increased health care costs due to restrictions on our ability to carve out certain categories of risk, such as acts of terrorism; and disruption of the financial and insurance markets in general.

Financial Outlook

      From time to time in press releases and otherwise, we may publish forecasts or other forward-looking statements regarding our future results, including estimated revenues, net earnings and other operating and financial metrics. Any forecast of our future performance reflects various assumptions. These assumptions are subject to significant uncertainties, and as a matter of course, any number of them may prove to be incorrect. Further, the achievement of any forecast depends on numerous risks and other factors (including those described in this discussion), many of which are beyond our control. As a result, we cannot assure that our performance will be consistent with any management forecasts or that the variation from such forecasts will not be material and adverse. You are cautioned not to base your entire analysis of our business and prospects upon isolated predictions, but instead are encouraged to utilize the entire publicly available mix of historical and forward-looking information, as well as other available information affecting us and our services, when evaluating our prospective results of operations.

General Economic Conditions

      Changes in economic conditions could affect our business and results of operations. The state of the economy could affect our employer group renewal prospects and our ability to increase prices in some of our businesses. Although we are continuously striving to diversify our product offerings to address the changing needs of consumers, there can be no assurance that the effects of the current or a future downturn in economic conditions will not cause our existing customers to seek health coverage alternatives that we do not offer or will not result in significant loss of customers, or decreased margins on our continuing customers.

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Stock Market

      The market prices of the securities of the publicly-held companies in the industry in which we operate have shown volatility and sensitivity in response to many factors, including general market trends, public communications regarding managed care, litigation and judicial decisions, legislative or regulatory actions, health care cost trends, pricing trends, competition, earnings, membership reports of particular industry participants and acquisition activity. We cannot assure the level or stability of the price of our securities at any time or the affect of the foregoing or any other factors on such prices.

EXECUTIVE OFFICERS OF THE REGISTRANT

				First Elected as
Name	Age		Position	Executive Officer
William W. McGuire, M.D.		53	Chairman, Chief Executive Officer and Director		1988
Stephen J. Hemsley		49	President, Chief Operating Officer and Director		1997
Patrick J. Erlandson		42	Chief Financial Officer and Chief Accounting Officer		2001
David J. Lubben		50	General Counsel and Secretary		1996
Lois E. Quam		40	Chief Executive Officer, Ovations		1998
Jeannine M. Rivet		53	Executive Vice President and Chief Executive Officer, Ingenix		1998
Robert J. Sheehy		44	Chief Executive Officer, UnitedHealthcare		2001
R. Channing Wheeler		50	Chief Executive Officer, Uniprise		1998

      The Company’s Board of Directors elects executive officers annually. The Company’s executive officers serve until their successors are duly elected and qualified.

      Dr. McGuire is the Chairman of the Board of Directors and Chief Executive Officer of UnitedHealth Group. Dr. McGuire joined UnitedHealth Group as Executive Vice President in November 1988 and became its Chief Executive Officer in February 1991. Dr. McGuire also served as UnitedHealth Group’s Chief Operating Officer from May 1989 to June 1995 and as its President from November 1989 until May 1999.

      Mr. Hemsley is the President and Chief Operating Officer of UnitedHealth Group and has been a member of the Board of Directors since February 2000. Mr. Hemsley joined UnitedHealth Group in May 1997 as Senior Executive Vice President. He became Chief Operating Officer in September 1998 and was named President in May 1999. Prior to joining UnitedHealth Group, Mr. Hemsley was with Arthur Andersen LLP where he served since 1974 in various capacities, including Chief Financial Officer and Managing Partner, Strategy and Planning.

      Mr. Erlandson joined UnitedHealth Group in 1997. He became Controller and Chief Accounting Officer in September 1998 and was named Chief Financial Officer in January 2001. Prior to joining UnitedHealth Group, Mr. Erlandson was a partner with Arthur Andersen LLP where he served from 1981 to 1997.

      Mr. Lubben became UnitedHealth Group’s General Counsel and Secretary in October 1996. Prior to joining UnitedHealth Group, he was a partner in the law firm of Dorsey & Whitney LLP. Mr. Lubben first became associated with Dorsey & Whitney in 1977.

      Ms. Quam joined UnitedHealth Group in 1989 and became the Chief Executive Officer of Ovations in April 1998. Prior to April 1998, Ms. Quam served in various capacities including Chief Executive Officer, AARP Division; Vice President, Public Sector Services; and Director, Research. Prior to joining UnitedHealth Group, Ms. Quam served as Research Director from 1987-1989 for Partners National Health Plan.

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      Ms. Rivet joined UnitedHealth Group in June 1990 and became Executive Vice President of UnitedHealth Group and Chief Executive Officer of Ingenix in January 2001. Ms. Rivet was an Executive Vice President of UnitedHealthcare from October 1994 to March 1998 and served as the Chief Executive Officer of UnitedHealthcare from April 1998 to December 2000. She served as UnitedHealth Group’s Senior Vice President, Health Plan Operations from September 1993 to September 1994 and its Vice President of Health Service Operations from June 1990 to September 1993.

      Mr. Sheehy joined UnitedHealth Group in 1992 and became Chief Executive Officer of UnitedHealthcare in January 2001. From April 1998 to December 2000, he was President of UnitedHealthcare. Prior to April 1998, Mr. Sheehy served in various capacities with UnitedHealth Group, including Chief Executive Officer of United HealthCare of Ohio.

      Mr. Wheeler joined UnitedHealth Group in March 1995 and became Chief Executive Officer of Uniprise in May 1998. Prior to May 1998, he served in various capacities with UnitedHealth Group including Chief Executive Officer, Northeast Health Plans.

Item 2.     Properties

      As of December 31, 2001, the Company leased approximately 1.7 million aggregate square feet of space for its principal administrative offices in the greater Minneapolis/ St. Paul, Minnesota area and in Hartford, Connecticut. Excluding these areas, as of December 31, 2001, the Company leased approximately 4.9 million aggregate square feet in the United States and Europe. Such space accommodates health plans, managed care services, specialty programs or satellite administrative offices. The Company’s leases expire at various dates through May 31, 2025. As of December 31, 2001, the Company owned approximately 241,000 aggregate square feet of space for administrative offices in various states. Our administrative offices are accessed by our various businesses.

Item 3.     Legal Proceedings

      In September 1999, a group of plaintiffs’ trial lawyers publicly announced that they were targeting the managed care industry by way of class action litigation. Since that time, we have received several purported class action matters that generally challenge managed care practices including cost containment mechanisms, disclosure obligations and payment methodologies. We intend to defend vigorously all of these cases.

      In Re: Managed Care Litigation: MDL No. 1334. The multi-district litigation panel has consolidated several litigation matters involving UnitedHealth Group and its affiliates in the Southern District of Florida, Miami division. The UnitedHealth Group matters have been consolidated with litigation involving other industry members for the coordination of pre-trial proceedings. The litigation has been divided into two tracks, with one track comprising consumer claims and the other health care provider claims. Generally, the claims made in this consolidated litigation allege violations of ERISA and RICO in connection with alleged undisclosed policies intended to maximize profits. The litigation also asserts breach of state prompt payment laws and breach of contract claims alleging that UnitedHealth Group affiliates fail to timely reimburse providers for medical services rendered. The consolidated suits seek injunctive, compensatory and equitable relief as well as restitution, costs, fees and interest payments. Following the Court’s initial decisions on industry members’ motions to dismiss the complaints, amended complaints were filed in both tracks. On February 20, 2002 the Court granted in part and denied in part the industry defendants’ motion to dismiss the amended complaint in the member track litigation. In significant part, the Court limited the RICO and ERISA claims that could be brought by the plaintiffs, and dismissed entirely the common law claims for civil conspiracy and unjust enrichment. On March 14, 2002, the Court certified to the 11th Circuit the threshold issue of whether plaintiffs have standing to assert their RICO claims. The 11th Circuit has not ruled as to whether they will review the issue. All activity was stayed in the health care provider track pending resolution of a threshold appeal to determine which of the health care provider claims must be arbitrated. On March 14, 2002, the 11th Circuit affirmed the trial court’s arbitration ruling and it is anticipated that the stay will be lifted. In both tracks, decisions are pending on

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plaintiffs’ motions for class certification. Additionally, a decision is pending on industry members’ motion to dismiss in the health care provider track.

      The American Medical Association et al. v. Metropolitan Life Insurance Company, United HealthCare Services, Inc. and UnitedHealth Group was filed on March 15, 2000 in the Supreme Court of the State of New York, County of New York. On April 13, 2000, we removed this case to federal court. The suit alleges breach of contract and the implied covenant of good faith and fair dealing, deceptive acts and practices, and trade libel in connection with the calculation of reasonable and customary reimbursement rates for non-network providers. The suit seeks declaratory, injunctive, exemplary and compensatory relief as well as costs, fees and interest payments. An amended complaint was filed on August 25, 2000, which alleged two classes of plaintiffs, an ERISA class and a non-ERISA class. After the Court dismissed certain ERISA claims and the claims brought by the American Medical Association, a third amended complaint was filed. We have filed a motion to dismiss the third amended complaint.

      Because of the nature of our business, we are routinely subject to suits alleging various causes of action. Some of these suits may include claims for substantial non-economic or punitive damages. Although the results of pending litigation are always uncertain, we do not believe that any such actions, including those described above, or any other types of actions, currently threatened or pending will, individually or in the aggregate, have a material adverse effect on our financial position or results of operations.

Item 4.     Submission of Matters to a Vote of Security Holders

      None

PART II

Item 5.     Market for Registrant’s Common Equity and Related Stockholder Matters

      The information contained under the heading “Investor Information” in the Company’s Annual Report to Shareholders for the fiscal year ended December 31, 2001, is incorporated herein by reference. As of March 18, 2002, the Company had 12,954 shareholders of record.

      Pursuant to Rule 416 under the Securities Act of 1933, the number of shares of the Company’s common stock registered for sale under the Securities Act by our Registration Statement on Form S-4 filed on January 21, 1998, have been deemed to be increased accordingly to reflect the two-for-one split of the Company’s common stock in the form of a stock dividend effected on December 22, 2000.

Item 6. Selected Financial Data

      The information contained under the heading “Results of Operations” in the Company’s Annual Report to Shareholders for the fiscal year ended December 31, 2001, is incorporated herein by reference.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation

      The information contained under the heading “Results of Operations” in the Company’s Annual Report to Shareholders for the fiscal year ended December 31, 2001, is incorporated herein by reference.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

      The information contained under the heading “Quantitative and Qualitative Disclosures About Market Risk” in the Company’s Annual Report to Shareholders for the fiscal year ended December 31, 2001, is incorporated herein by reference.

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Item 8. Financial Statements and Supplementary Data

      The Company’s consolidated financial statements, together with the Report of Independent Public Accountants thereon, appearing on pages 38 through 57 of the Company’s Annual Report to Shareholders for the fiscal year ended December 31, 2001, are incorporated herein by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

      None

PART III

Item 10. Directors and Executive Officers of the Registrant

      The information included under the headings “Election of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance” in the Company’s definitive Proxy Statement for its Annual Meeting of Shareholders to be held May 15, 2002, is incorporated herein by reference.

      Pursuant to General Instruction G(3) to Form 10-K and Instruction 3 to Item 401(b) of Regulation S-K, information regarding executive officers of the Company is provided in Part I of this Annual Report on Form 10-K under the caption “Executive Officers of the Registrant.”

Item 11. Executive Compensation

      The information included under the heading “Executive Compensation” in the Company’s definitive Proxy Statement for the Annual Meeting of Shareholders to be held May 15, 2002, is incorporated herein by reference.

Item 12.      Security Ownership of Certain Beneficial Owners and Management

      The information included under the heading “Security Ownership of Certain Beneficial Owners and Management” in the Company’s definitive Proxy Statement for the Annual Meeting of Shareholders to be held May 15, 2002, is incorporated herein by reference.

Item 13.      Certain Relationships and Related Transactions

      Information regarding certain relationships and related transactions that appears under the heading “Certain Relationships and Transactions” in the Company’s definitive Proxy Statement for the Annual Meeting of Shareholders to be held May 15, 2002, is incorporated herein by reference.

PART IV

Item 14.      Exhibits, Financial Statement Schedules and Reports on Form 8-K

      (a)1. Financial Statements

      The following consolidated financial statements of the Company are included in the Company’s Annual Report to Shareholders for the fiscal year ended December 31, 2001 and are incorporated herein by reference:

      Consolidated Statements of Operations for the years ended December 31, 2001, 2000 and 1999.

      Consolidated Balance Sheets as of December 31, 2001 and 2000.

Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2001, 2000 and 1999.

Consolidated Statements of Cash Flows for the years ended December 31, 2001, 2000 and 1999.

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      Notes to Consolidated Financial Statements.

      Report of Independent Public Accountants.

      (a)2. Financial Statement Schedules

      None

      (a)3. Exhibits

3(a)	Articles of Amendment to Second Restated Articles of Incorporation of the Company
3(b)	Second Restated Articles of Incorporation of the Company (incorporated by reference to Exhibit 3(a) to the Company’s Annual Report on Form 10-K for the year ended December 31, 1995 and Exhibit 3(a) to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999)
3(c)	Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-8 (SEC File No. 333-55666))
4(a)	Senior Indenture, dated as of November 15, 1998, between the Company and The Bank of New York (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-3 (SEC File No. 333-44569))
4(b)	Amendment to Senior Indenture, dated as of November 6, 2000, between the Company and The Bank of New York (incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001)
4(c)	Pursuant to Item 601(b)(4)(iii) of Regulation S-K, copies of instruments defining the rights of certain holders of long-term debt are not filed. The Company agrees to furnish copies thereof to the Securities and Exchange Commission upon request.
*10(a)	United HealthCare Corporation 1998 Broad-Based Stock Incentive Plan, as amended
*10(b)	United HealthCare Corporation Amended and Restated 1991 Stock and Incentive Plan, Amended and Restated Effective May 9, 2001
*10(c)	UnitedHealth Group Incorporated Nonemployee Director Stock Option Plan, Amended and Restated Effective October 30, 2001
*10(d)	UnitedHealth Group Incorporated Leadership Results Plan (incorporated by reference to Exhibit 10(d) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000)
*10(e)	UnitedHealth Group Incorporated 2001 Executive Savings Plan
*10(f)	Supplemental Long Term Executive Compensation Plan (incorporated by reference to Exhibit 10(f) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000)
*10(g)	UnitedHealth Group Directors’ Compensation Deferral Plan
*10(h)	Employment Agreement, dated as of October 13, 1999, between United HealthCare Corporation and William W. McGuire, M.D. (incorporated by reference to Exhibit 10(f) to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999)
*10(i)	Letter to William W. McGuire, M.D., dated as of February 13, 2001, regarding Employment Agreement (incorporated by reference to Exhibit 10(h) of the Company’s Annual Report on Form 10-K for the year ended December 31, 2000)
*10(j)	Employment Agreement dated as of October 13, 1999, between United HealthCare Corporation and Stephen J. Hemsley (incorporated by reference to Exhibit 10(g) to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999)
*10(k)	Letter to Stephen J. Hemsley, dated as of February 13, 2001, regarding Employment Agreement (incorporated by reference to Exhibit 10(j) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000)
*10(l)	Employment Agreement, dated as of October 16, 1998 , between United HealthCare Services, Inc. and Robert J. Sheehy, as amended

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*10(m)	Employment Agreement, dated as of October 16, 1998, between United HealthCare Services, Inc. and Lois E. Quam, as amended, and Memorandum of Understanding, effective as of October 11, 1999, between Lois E. Quam and United HealthCare Services, Inc. (incorporated by reference to Exhibit 10(l) of the Company’s Annual Report on Form 10-K for the year ended December 31, 2000)
*10(n)	Employment Agreement, dated as of October 1, 1998, between United HealthCare Services, Inc. and Patrick J. Erlandson (incorporated by reference to Exhibit 10(m) of the Company’s Annual Report on Form 10-K for the year ended December 31, 2000)
*10(o)	Employment Agreement, dated as of October 16, 1998, between United HealthCare Services, Inc. and Jeannine Rivet (incorporated by reference to Exhibit 10(h) to the Company’s Annual Report on Form 10-K for the year ended December 31, 1998)
*10(p)	Employment Agreement, dated as of May 20, 1998, between United HealthCare Services, Inc. and R. Channing Wheeler (incorporated by reference to Exhibit 10(c) to the Company’s Quarterly Report of Form 10-Q for the quarter ended June 30, 1998)
*10(q)	Employment Agreement, dated as of October 16, 1998, between United HealthCare Services, Inc. and David J. Lubben, as amended (incorporated by reference to Exhibit 10(p) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000)
†10(r)	Information Technology Services Agreement between The MetraHealth Companies, Inc. and Integrated Systems Solutions Corporation dated as of November 1, 1995 (incorporated by reference to Exhibit 10(t) to the Company’s Annual Report on Form 10-K for the year ended December 31, 1995)
†10(s)	AARP Health Insurance Agreement by and among American Association of Retired Persons, Trustees of the AARP Insurance Plan and United HealthCare Insurance Company dated as of February 26, 1997 (incorporated by reference to Exhibit 10(p) to the Company’s Annual Report on Form 10-K/ A for the year ended December 31, 1996)
†10(t)	First Amendment to the AARP Health Insurance Agreement by and among American Association of Retired Persons, Trustees of the AARP Insurance Plan and United HealthCare Insurance Company effective January 1, 1998 (incorporated by reference to Exhibit 10(a) to the Company’s Quarterly Report on Form 10-Q for the quarter period ended June 30, 1998)
†10(u)	Second Amendment to the AARP Health Insurance Agreement by and among American Association of Retired Persons, Trustees of the AARP Insurance Plan and United HealthCare Insurance Company effective January 1, 1998 (incorporated by reference to Exhibit 10(b) to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1998)
†10(v)	Information Technology Services Agreement between United HealthCare Services, Inc., a wholly owned subsidiary of the Company, and Unisys Corporation dated June 1, 1996 (incorporated by reference to Exhibit 10 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1998)
†10(w)	Pharmacy Benefit Management Agreement between United HealthCare Services, Inc. and Merck Medco Managed Care, L.L.C. (incorporated by reference to Exhibit 10(v) of the Company’s Annual Report on Form 10-K for the year ended December 31, 2000)
11	Statement regarding computation of per share earnings (incorporated by reference to the information contained under the heading “Net Earnings Per Common Share” in Note 2 to the Notes to Consolidated Financial Statements included in the Company’s Annual Report to Shareholders for the fiscal year ended December 31, 2001 and which is included as part of Exhibit 13 hereto)
13	Portions of the Company’s Annual Report to Shareholders for the fiscal year ended December 31, 2001
21	Subsidiaries of the Company
23	Consent of Independent Public Accountants
24	Powers of Attorney
99	Letter from the Company to the Securities and Exchange Commission confirming certain quality assurance representations made by Arthur Andersen to the Company

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†	Pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, confidential portions of these Exhibits have been deleted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.
*	Denotes management contracts and compensation plans in which certain directors and named executive officers participate and which are being filed pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K.

      (b) Reports on Form 8-K

      None

21

SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

UnitedHealth Group Incorporated

By  /s/ WILLIAM W. MCGUIRE, M.D.

William W. McGuire, M.D

Chief Executive Officer

Dated: April 1, 2002

      Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ WILLIAM W. MCGUIRE, M.D. William W. McGuire, M.D.	Director, Chief Executive Officer (principal executive officer)	April 1, 2002
/s/ PATRICK J. ERLANDSON Patrick J. Erlandson	Chief Financial Officer and Chief Accounting Officer (principal financial and accounting officer)	April 1, 2002
* William C. Ballard, Jr.	Director	April 1, 2002
* Richard T. Burke	Director	April 1, 2002
* Stephen J. Hemsley	Director	April 1, 2002
* James A. Johnson	Director	April 1, 2002
* Thomas H. Kean	Director	April 1, 2002
* Douglas W. Leatherdale	Director	April 1, 2002
* Walter F. Mondale	Director	April 1, 2002

22

Signature		Title	Date
* Mary O. Mundinger		Director	April 1, 2002
* Robert L. Ryan		Director	April 1, 2002
* Gail R. Wilensky		Director	April 1, 2002
*By	/s/ DAVID J. LUBBEN David J. Lubben As Attorney-in-Fact

23

EXHIBIT INDEX

Number			Description
	3(a	)	Articles of Amendment to Second Restated Articles of Incorporation of the Company
	3(b	)	Second Restated Articles of Incorporation of the Company (incorporated by reference to Exhibit 3(a) to the Company’s Annual Report on Form 10-K for the year ended December 31, 1995 and Exhibit 3(a) to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999)
	3(c	)	Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-8 (SEC File No. 333-55666))
	4(a	)	Senior Indenture, dated as of November 15, 1998, between the Company and The Bank of New York (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-3 (SEC File No. 333-44569))
	4(b	)	Amendment to Senior Indenture, dated as of November 6, 2000, between the Company and The Bank of New York (incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001)
	4(c	)	Pursuant to Item 601(b)(4)(iii) of Regulation S-K, copies of instruments defining the rights of certain holders of long-term debt are not filed. The Company agrees to furnish copies thereof to the Securities and Exchange Commission upon request.
	10(a	)	United HealthCare Corporation 1998 Broad-Based Stock Incentive Plan, as amended
	10(b	)	United HealthCare Corporation Amended and Restated 1991 Stock and Incentive Plan, Amended and Restated Effective May 9, 2001
	10(c	)	UnitedHealth Group Incorporated Nonemployee Director Stock Option Plan, Amended and Restated Effective October 30, 2001
	10(d	)	UnitedHealth Group Incorporated Leadership Results Plan (incorporated by reference to Exhibit 10(d) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000)
	10(e	)	UnitedHealth Group Incorporated’s 2001 Executive Savings Plan
	10(f	)	Supplemental Long Term Executive Compensation Plan (incorporated by reference to Exhibit 10(f) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000)
	10(g	)	UnitedHealth Group Directors’ Compensation Deferral Plan
	10(h	)	Employment Agreement, dated as of October 13, 1999, between United HealthCare Corporation and William W. McGuire, M.D. (incorporated by reference to Exhibit 10(f) to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999)
	10(i	)	Letter to William W. McGuire, M.D., dated as of February 13, 2001, regarding Employment Agreement (incorporated by reference to Exhibit 10(h) of the Company’s Annual Report on Form 10-K for the year ended December 31, 2000)
	10(j	)	Employment Agreement dated as of October 13, 1999, between United HealthCare Corporation and Stephen J. Hemsley (incorporated by reference to Exhibit 10(g) to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999)
	10(k	)	Letter to Stephen J. Hemsley, dated as of February 13, 2001, regarding Employment Agreement (incorporated by reference to Exhibit 10(j) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000)
	10(l	)	Employment Agreement, dated as of October 16, 1998 , between United HealthCare Services, Inc. and Robert J. Sheehy, as amended
	10(m	)	Employment Agreement, dated as of October 16, 1998, between United HealthCare Services, Inc. and Lois E. Quam, as amended, and Memorandum of Understanding, effective as of October 11, 1999, between Lois E. Quam and United HealthCare Services, Inc. (incorporated by reference to Exhibit 10(l) of the Company’s Annual Report on Form 10-K for the year ended December 31, 2000)

Number			Description
	10(n	)	Employment Agreement, dated as of October 1, 1998, between United HealthCare Services, Inc. and Patrick J. Erlandson (incorporated by reference to Exhibit 10(m) of the Company’s Annual Report on Form 10-K for the year ended December 31, 2000)
	10(o	)	Employment Agreement, dated as of October 16, 1998, between United HealthCare Services, Inc. and Jeannine Rivet (incorporated by reference to Exhibit 10(h) to the Company’s Annual Report on Form 10-K for the year ended December 31, 1998)
	10(p	)	Employment Agreement, dated as of May 20, 1998, between United HealthCare Services, Inc. and R. Channing Wheeler (incorporated by reference to Exhibit 10(c) to the Company’s Quarterly Report of Form 10-Q for the quarter ended June 30, 1998)
	10(q	)	Employment Agreement, dated as of October 16, 1998, between United HealthCare Services, Inc. and David J. Lubben, as amended (incorporated by reference to Exhibit 10(p) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000)
	†10(r	)	Information Technology Services Agreement between The MetraHealth Companies, Inc. and Integrated Systems Solutions Corporation dated as of November 1, 1995 (incorporated by reference to Exhibit 10(t) to the Company’s Annual Report on Form 10-K for the year ended December 31, 1995)
	†10(s	)	AARP Health Insurance Agreement by and among American Association of Retired Persons, Trustees of the AARP Insurance Plan and United HealthCare Insurance Company dated as of February 26, 1997 (incorporated by reference to Exhibit 10(p) to the Company’s Annual Report on Form 10-K/ A for the year ended December 31, 1996)
	†10(t	)	First Amendment to the AARP Health Insurance Agreement by and among American Association of Retired Persons, Trustees of the AARP Insurance Plan and United HealthCare Insurance Company effective January 1, 1998 (incorporated by reference to Exhibit 10(a) to the Company’s Quarterly Report on Form 10-Q for the quarter period ended June 30, 1998)
	†10(u	)	Second Amendment to the AARP Health Insurance Agreement by and among American Association of Retired Persons, Trustees of the AARP Insurance Plan and United HealthCare Insurance Company effective January 1, 1998 (incorporated by reference to Exhibit 10(b) to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1998)
	†10(v	)	Information Technology Services Agreement between United HealthCare Services, Inc., a wholly owned subsidiary of the Company, and Unisys Corporation dated June 1, 1996 (incorporated by reference to Exhibit 10 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1998)
	†10(w	)	Pharmacy Benefit Management Agreement between United HealthCare Services, Inc. and Merck Medco Managed Care, L.L.C. (incorporated by reference to Exhibit 10(v) of the Company’s Annual Report on Form 10-K for the year ended December 31, 2000)
	11		Statement regarding computation of per share earnings (incorporated by reference to the information contained under the heading “Net Earnings Per Common Share” in Note 2 to the Notes to Consolidated Financial Statements included in the Company’s Annual Report to Shareholders for the fiscal year ended December 31, 2001 and which is included as part of Exhibit 13 hereto)
	13		Portions of the Company’s Annual Report to Shareholders for the fiscal year ended December 31, 2001
	21		Subsidiaries of the Company
	23		Consent of Independent Public Accountants
	24		Powers of Attorney
	99		Letter from the Company to the Securities and Exchange Commission confirming certain quality assurance representations made by Arthur Andersen to the Company

†  Pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, confidential portions of these Exhibits have been deleted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

EX-3.(A)

                                                                    EXHIBIT 3(a)

                              ARTICLES OF AMENDMENT
                                       TO
                    SECOND RESTATED ARTICLES OF INCORPORATION
                                       OF
                         UNITEDHEALTH GROUP INCORPORATED

The undersigned, Thad C. Johnson, Assistant Secretary of UnitedHealth Group
Incorporated, a Minnesota corporation (the "Company"), hereby certifies that the
following amendment to the Company's Second Restated Articles of Incorporation
was duly adopted pursuant to Chapter 302A of the Minnesota Statutes:

         Section 3(a) of the Company's Second Restated Articles of Incorporation
         is hereby amended in its entirety to read as follows:

                  "3. (a) Authorized Classes of Stock. The total number of
                  shares of capital stock which this corporation is authorized
                  to issue is 1,510,000,000 shares, including 1,500,000,000
                  shares of Common Stock, $.01 par value, and 10,000,000 shares
                  of Preferred Stock, $.001 par value. Shares of each class of
                  stock of the corporation may be issued for such consideration
                  and for such corporate purposes as the Board of Directors may
                  from time to time determine."

IN WITNESS WHEREOF, the undersigned, the Assistant Secretary of UnitedHealth
Group Incorporated, being duly authorized on behalf of UnitedHealth Group
Incorporated, has executed these Articles of Amendment as of May 14, 2001.


                                           /s/ Thad C. Johnson
                                           ------------------------------------
                                           Thad C. Johnson, Assistant Secretary

EX-10.(A)

                                                                   EXHIBIT 10(a)

                          UNITED HEALTHCARE CORPORATION
                      1998 BROAD-BASED STOCK INCENTIVE PLAN

1. PURPOSE OF PLAN.

     This Plan shall be known as the "United HealthCare Corporation 1998
Broad-Based Stock Incentive Plan" (the "Plan"). The purpose of the Plan is to
aid in maintaining and developing personnel capable of contributing to the
future success of United HealthCare Corporation, a Minnesota corporation (the
"Company"), to offer such personnel additional incentives to put forth maximum
efforts for the success of the business, and to afford them an opportunity to
acquire a proprietary interest in the Company through stock options and other
awards as provided herein. The Plan is intended to be a "broadly-based plan"
within the meaning of the New York Stock Exchange Shareholder Approval Policy.
Options granted under this Plan are not intended to be incentive stock options
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"). Other awards granted under this Plan shall be in the form
of stock appreciation rights ("SARs"), restricted stock awards or performance
awards as hereinafter described.

2. STOCK SUBJECT TO PLAN.

     Subject to adjustment as provided in Section 14 hereof and the provisions
of this Section 2, the stock to be subject to options or other awards under the
Plan shall be the Company's authorized shares of common stock, par value $.01
per share (the "Common Shares"). The Common Shares may be either authorized but
unissued shares, or issued shares which have been reacquired by the Company.
Subject to adjustment as provided in Section 14 hereof, the number of Common
Shares as to which options may be granted or awards may be issued hereunder
shall be 11,562,698 Common Shares (the "Initial Common Shares"). Each fiscal
quarter 0.75% of the number of Common Shares which were issued and outstanding
as of the end of the fiscal quarter immediately preceding the then-current
fiscal quarter shall be added to the number of Initial Common Shares that were
available for grant in any preceding fiscal quarter but were not otherwise
granted. If grants or awards lapse, expire, terminate or are canceled prior to
the issuance of Common Shares, or if Common Shares are reacquired by the Company
pursuant to this Plan in connection with payment of the exercise price of
options or awards or satisfaction of tax obligations, such Common Shares will be
available for new grants or awards.

3. ADMINISTRATION OF PLAN.

     (a) Administration of Plan by Committee. The Plan shall be administered by
a committee (the "Committee") of two or more directors of the Company, none of
whom shall be officers or employees of the Company and all of whom shall be
"Non-Employee Directors" with respect to the Plan within the meaning of Rule
16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and any successor rule. The members of the Committee shall be appointed
by and serve at the pleasure of the Board of Directors.

     (b) Authority of Committee. Subject to the express provisions of the Plan,
the Committee shall have the plenary authority and discretion to: (i) determine
the purchase price of the Common Shares covered by each option, (ii) determine
the employees to whom and the time or times at which options and awards shall be
granted and the number of shares to be subject to each, (iii) determine the form
of payment to be made upon the exercise of an SAR or in connection with
performance awards, either cash, Common Shares or a combination thereof, (iv)
determine the terms of exercise of each option and award, (v) accelerate or
defer the time at which all or any part of an option or award may be exercised,
(vi) amend or modify the terms of any option or award with the consent of the
holder of the optionee or grantee, (vii) interpret the Plan, (viii) prescribe,
amend and rescind rules and regulations relating to the Plan, (ix) determine the
terms and provisions of each option or award agreement under the Plan (any of
which agreements need not be identical), (x) delegate such of its authority
granted herein as it deems is in the best interests of the Company, and (xi)
make all other determinations necessary or advisable for the administration of
the Plan, subject to the exclusive authority of the Board of Directors under
Section 16 herein to amend or terminate the Plan. The Committee's determinations
on the foregoing matters, unless otherwise disapproved by the Board of Directors
of the Company, shall be final and conclusive; provided, however, that the
Committee's determinations with respect to the matters set forth in clauses (ii)
and (iii) above, unless delegated as provided in subsection 3(C)





below, shall be final and conclusive without any right of disapproval by the
Board of Directors of the Company.

     (c) Grants to Certain Officers and Directors. The Chief Executive Officer
of the Company shall have the authority, as granted by the Committee pursuant to
clause (x) of the preceding subsection, to grant, pursuant to the Plan, options
or other awards to eligible persons who are not considered by the Company as its
officers or directors for purposes of Section 16 of the Exchange Act. The Chief
Executive Officer of the Company shall provide information as to any grants made
pursuant to this subsection to the Committee at its next meeting.

     (d) Action of the Committee. The Committee shall select one of its members
as its Chairperson and shall hold its meetings at such times and places as it
may determine. A majority of its members shall constitute a quorum. All
determinations of the Committee shall be made by not less than a majority of its
members. Any decision or determination reduced to writing and signed by all of
the members of the Committee shall be fully effective as if it had been made by
a majority vote at a meeting duly called and held. The grant of an option or
award shall be effective only if a written agreement shall have been duly
executed and delivered or if notice of such option or award shall have been duly
communicated by and on behalf of the Company following such grant. The Committee
may appoint a Secretary and may make such rules and regulations for the conduct
of its business as it shall deem advisable.

4. ELIGIBILITY; GRANTING OF OPTIONS AND AWARDS.

     (a) Generally. Subject to the provisions of Section 4(b) below, all
full-time and part-time employees of, and consultants and independent
contractors to, the Company or its subsidiaries shall be eligible to receive
options and awards under this Plan.

     (b) Grants of Options and Awards. In determining the persons to whom
options and awards shall be granted and the number of shares subject to each,
the Committee may take into account any factors as the Committee in its
discretion shall deem relevant. A person who has been granted an option or award
under this Plan may be granted additional options or awards under the Plan if
the Committee shall so determine.

     (c) No Right to Employment. Nothing in the Plan or in any agreement
thereunder shall confer on any employee any right to continue in the employ of
the Company or any of its subsidiaries or affect in any way the right of the
Company or any of its subsidiaries to terminate his or her employment at any
time.

5. PRICE.

     The Committee shall determine the option price for options and awards. For
purposes of the preceding sentence and for all other valuation purposes under
the Plan, the fair market value of the Common Shares shall be as reasonably
determined by the Committee by such methods or procedures as shall be
established from time to time by the Committee.

6. TERM.

     Each option and award and all rights and obligations thereunder shall
expire on the date determined by the Committee and specified in the option or
award agreement. The Committee shall be under no duty to provide terms of like
duration for options or awards granted under the Plan. Notwithstanding the
foregoing, the term of options granted under the Plan may not extend more than
fifteen (15) years from the date of grant of such option.

7. EXERCISE OF OPTION OR AWARD.

     (a) Vesting. The Committee shall have full and complete authority to
determine whether an option or award will be exercisable in full at any time or
from time to time during the term thereof, or to provide for the exercise
thereof in installments and upon the occurrence of certain events, such as
termination of employment for any reason, and at such times during the term of
the option or award as the Committee may determine and specify in the option or
award agreement.

     (b) Compliance with Securities Laws. The exercise of any option or award
granted hereunder shall be effective only at such time as the sale of Common
Shares pursuant to such exercise will not violate any state or federal
securities or other laws.

     (c) Notice of Exercise; Payment of Exercise Price. An optionee or grantee
electing to exercise an option or award, or his or her representative, shall
give notice to the Company of such election and of the number of shares subject
to such exercise. The Company will verify the appropriateness of the election
and determine the compensation and related withholding tax amounts. The exercise
amount and applicable taxes shall be tendered either prior to the issuance of
shares pursuant to the exercise or, if such option is exercised pursuant to a
cashless exercise and sale transaction, on or prior to the settlement date of
such transaction. Payment shall be made to the Company in cash (including wire
transfer, bank check, certified check, personal check, or money order), or, at
the discretion of the Committee and as specified by the Committee, by delivering
either (i) Common Shares already owned by the optionee or grantee having a fair
market value as of such date equal to the full purchase price of the shares,
together with any applicable withholding taxes, or (ii) a combination of cash
and such shares; provided, however, that an optionee shall not be entitled to
tender Common Shares pursuant to successive, substantially simultaneous
exercises of options granted under this or any other stock option plan of the
Company. The fair market value of such tendered shares shall be determined as
provided in Section 5 herein. Until such person has been issued the shares
subject to such exercise, he or she shall possess no rights as a shareholder
with respect to such shares.

8. ALTERNATIVE STOCK APPRECIATION RIGHTS.

     (a) Grant. At the time of grant of an option or award under the Plan (or at
any other time), the Committee, in its discretion, may grant a SAR evidenced by
an agreement in such form as the Committee shall from time to time approve. Any
such SAR may be subject to restrictions on the exercise thereof as may be set
forth in the agreement representing such SAR, which agreement shall comply with
and be subject to the following terms and conditions and any additional terms
and conditions established by the Committee that are consistent with the terms
of the Plan.

     (b) Exercise. An SAR shall be exercised by the delivery to the Company of a
written notice which shall state that the holder thereof elects to exercise his
or her SAR as to the number of shares



                                       2


specified in the notice and which shall further state what portion, if any, of
the SAR exercise amount (hereinafter defined) the holder thereof requests be
paid to him or her in cash and what portion, if any, is to be paid in Common
Shares of the Company. The Committee promptly shall cause to be paid to such
holder the SAR exercise amount, less any applicable withholding taxes, either in
cash, in Common Shares of the Company, or in any combination of cash and shares
as the Committee may determine. Such determination may be either in accordance
with the request made by the holder of the SAR or in the sole and absolute
discretion of the Committee. The SAR exercise amount is the excess of the fair
market value of one share of the Company's Common Shares on the date of exercise
over the per share exercise price in respect of which the SAR was granted,
multiplied by the number of shares as to which the SAR is exercised. For the
purposes, hereof, the fair market value of the Common Shares shall be determined
as provided in Section 5 herein.

9. RESTRICTED STOCK AWARDS.

     The Committee may grant awards of Common Shares subject to forfeiture and
transfer restrictions. Any restricted stock award shall be evidenced by an
agreement in such form as the Committee shall from time to time approve, which
agreement shall comply with and be subject to the following terms and conditions
and any additional terms and conditions established by the Committee that are
consistent with the terms of the Plan:

     (a) Grant of Restricted Stock Awards. Each restricted stock award made
under the Plan shall be for such number of Common Shares as shall be determined
by the Committee and set forth in the agreement containing the terms of such
restricted stock award. Such agreement shall set forth a period of time during
which the grantee must remain in the continuous employment of the Company in
order for the forfeiture and transfer restrictions to lapse. If the Committee so
determines, the restrictions may lapse during such restricted period in
installments with respect to specified portions of the shares covered by the
restricted stock award. The agreement may also, in the discretion of the
Committee, set forth performance or other conditions that will subject the
Common Shares to forfeiture and transfer restrictions. The Committee may, at its
discretion, waive all or any part of the restrictions applicable to any or all
outstanding restricted stock awards.

     (b) Delivery of Common Shares and Restrictions. At the time of a restricted
stock award, the number of Common Shares awarded thereunder shall be registered
in the name of the grantee. If a certificate representing such shares is issued,
such certificate shall be held by the Company or any custodian appointed by the
Company for the account of the grantee subject to the terms and conditions of
the Plan, and shall bear such a legend setting forth the restrictions imposed
thereon as the Committee, in its discretion, may determine. The grantee shall
have all rights of a shareholder with respect to the Common Shares, including
the right to receive dividends and the right to vote such shares, subject to the
following restrictions: (i) the grantee shall not be entitled to delivery of the
stock certificate, if one is issued, until the expiration of the restricted
period and the fulfillment of any other restrictive conditions set forth in the
restricted stock agreement with respect to such Common Shares; (ii) none of the
Common Shares may be sold, assigned, transferred, pledged, hypothecated or
otherwise encumbered or disposed of during such restricted period or until after
the fulfillment of any such other restrictive conditions; and (iii) except as
otherwise determined by the Committee, all of the shares shall be forfeited and
all rights of the grantee to such shares shall terminate, without further
obligation on the part of the Company, unless the grantee remains in the
continuous employment of the Company for the entire restricted period in
relation to which such Common Shares were granted and unless any other
restrictive conditions relating to the restricted stock award are met. Any
Common Shares, any other securities of the Company and any other property
(except for cash dividends) distributed with respect to the Common Shares
subject to restricted stock awards shall be subject to the same restrictions,
terms and conditions as such restricted Common Shares.

     (c) Termination of Restrictions. At the end of the restricted period and
provided that any other restrictive conditions of the restricted stock award are
met, or at such earlier time as otherwise determined by the Committee, all
restrictions set forth in any agreement relating to the restricted stock award
or in the Plan shall lapse as to the restricted Common Shares subject thereto.
Upon payment by the grantee to the Company of any withholding tax required to be
paid, a stock certificate, if one is requested, for the appropriate number of
Common Shares, free of the restrictions and the restricted stock legend, shall
be delivered to the grantee or his or her beneficiary or estate, as the case may
be.

10. PERFORMANCE AWARDS.

     The Committee is further authorized to grant performance awards. Subject to
the terms of this Plan and any applicable award agreement, a performance award
granted under the Plan (i) may be denominated or payable in cash, Common Shares
(including, without limitation, restricted stock), other securities, other
awards, or other property and (ii) shall confer on the holder thereof rights
valued as determined by the Committee, in its discretion, and payable to, or
exercisable by, the holder of the performance awards, in whole or in part, upon
achievement of such performance goals during such performance periods as the
Committee, in its discretion, shall establish. Subject to the terms of this Plan
and any applicable award agreement, the Committee shall determine the
performance goals to be achieved during any performance period, the length of
any performance period, the amount of any performance award granted, and the
amount of any payment or transfer to be made by the grantee and by the Company
under any performance award.

11. INCOME TAX WITHHOLDING AND TAX BONUSES.

     (a) Income Tax Withholding. In order to comply with all applicable federal,
state or local income tax laws or regulations, the Company may take such action
as it deems appropriate to ensure that all applicable federal, state or local
payroll, withholding, income or other taxes, which are the sole and absolute
responsibility of an optionee or grantee under the Plan, are withheld or
collected from such optionee or grantee prior to his or her receipt of Common
Shares pursuant to the exercise of an option or the satisfaction of the
conditions of any other award. In



                                       3


order to assist an optionee or grantee in paying all federal and state taxes to
be withheld or collected upon exercise of an option or award, the Committee may,
in its absolute discretion, permit the optionee or grantee to satisfy such tax
obligation by (i) electing to have the Company withhold a portion of the Common
Shares otherwise to be delivered upon exercise of such option or award with a
fair market value, determined in accordance with Section 5 herein, equal to such
taxes or (ii) delivering to the Company Common Shares other than the shares
issuable upon exercise of such option or award with a fair market value,
determined in accordance with Section 5, equal to such taxes. The election must
be made on or before the date that the amount of tax to be withheld is
determined.

     (b) Tax Bonuses. The Committee shall have the authority, at the time of
grant of an option under the Plan or at any time thereafter, to approve tax
bonuses to designated optionees or grantees to be paid upon their exercise of
options or awards granted hereunder. The amount of any such payments shall be
determined by the Committee but shall not exceed one hundred percent (100%) of
the excess of the fair market value of the shares received upon exercise of an
option or award over the price paid therefor. The Committee shall have full
authority in its absolute discretion to determine the amount of any such tax
bonus and the terms and conditions affecting the vesting and payment thereof.

12. ADDITIONAL RESTRICTIONS.

     The Committee shall have full and complete authority to determine whether
all or any part of the Common Shares of the Company acquired upon exercise of
any of the options or awards granted under the Plan shall be subject to
restrictions on the transferability thereof or any other restrictions affecting
in any manner the optionee's or grantee's rights with respect thereto, but any
such restriction shall be contained in the agreement relating to such options or
awards.

13. NONTRANSFERABILITY.

     No option or award granted under the Plan shall be transferable by an
optionee or grantee, otherwise than by will or the laws of descent or
distribution. Except as otherwise provided in an option or award agreement,
during the lifetime of an optionee or grantee, the option or award shall be
exercisable only by such optionee or grantee. The Committee shall have the
authority to waive the provisions of this Section with respect to any grant of
options under the Plan subject to such terms, conditions or limitations as they
may, in their discretion impose.

14. DILUTION OR OTHER ADJUSTMENTS.

     If there shall be any change in the Common Shares through merger,
consolidation, reorganization, recapitalization, dividend in the form of stock
(of whatever amount), stock split or other change in the corporate structure,
appropriate adjustments in the Plan and outstanding options and awards shall be
made by the Committee. In the event of any such changes, adjustments shall
include, where appropriate, changes in the aggregate number of shares subject to
the Plan, the number of shares and the price per share subject to outstanding
options and awards and the amount payable upon exercise of outstanding awards,
in order to prevent dilution or enlargement of option or award rights.

15. AMENDMENT OR DISCONTINUANCE OF PLAN.

     The Board of Directors may amend or discontinue the Plan at any time. The
Committee, or the Company's Chief Executive Officer as authorized hereunder or
by the Committee, may grant options and awards for the number of shares
authorized by Section 2 herein without further amendment to the Plan increasing
the number of shares authorized for distribution. The Board of Directors shall
not alter or impair any option or award theretofore granted under the Plan
without the consent of the holder of the option or award.

16. TIME OF GRANTING.

     Nothing contained in the Plan or in any resolution adopted or to be adopted
by the Board of Directors or by the shareholders of the Company, and no action
taken by the Committee, the Chief Executive Officer or the Board of Directors
(other than the execution and delivery of an option or award agreement), shall
constitute the granting of an option or award hereunder.

17. EFFECTIVE DATE AND TERMINATION OF PLAN.

     (a) Effective Date of Plan. The Board of Directors approved the Plan on May
13, 1998, which shall be the effective date of the Plan.

     (b) Termination of Plan. Unless the Plan shall have been discontinued as
provided in Section 15 hereof, the Plan shall terminate on May 13, 2008. No
option or award may be granted after such termination, but termination of the
Plan shall not, without the consent of the optionee or grantee, alter or impair
any rights or obligations under any option or award theretofore granted.



                                       4

EX-10.(B)

                                                                   EXHIBIT 10(b)

                          UNITED HEALTHCARE CORPORATION
                              AMENDED AND RESTATED
                         1991 STOCK AND INCENTIVE PLAN,
                   AMENDED AND RESTATED EFFECTIVE MAY 9, 2001

1. PURPOSE OF PLAN.

     This Plan shall be known as the "United HealthCare Corporation 1991 Stock
and Incentive Plan" and is hereinafter referred to as the "Plan". The purpose of
the Plan is to aid in maintaining and developing personnel capable of
contributing to the future success of United HealthCare Corporation, a Minnesota
corporation (the "Company"), to offer such personnel additional incentives to
put forth maximum efforts for the success of the business, and to afford them an
opportunity to acquire a proprietary interest in the Company through stock
options and other awards as provided herein. Options granted under this Plan may
be either incentive stock options ("Incentive Stock Options") within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code), or
options which do not qualify as Incentive Stock Options. Awards granted under
this Plan shall be SARs, restricted stock or performance awards as hereinafter
described.

2. STOCK SUBJECT TO PLAN.

     Subject to the adjustments authorized by Section 15 hereof and the
provisions of the remaining subsection of this Section 2, the stock to be
subject to options or other awards under the Plan shall be the Company's
authorized common shares, par value $.01 per share (the "Shares"). Such shares
may be either authorized but unissued shares, or issued shares which have been
reacquired by the Company. Subject to adjustment as provided in Section 15
hereof, the number of shares on which options may be exercised or other awards
issued under this Plan shall be 6,000,000 shares plus a number of shares equal
to the sum of (i) one and one-half percent of the number of shares of the
Company's Common Stock outstanding as of the December 31 immediately preceding
the year in which such options may be granted plus (ii) options for such number
of shares of Common Stock as were available for grant in any preceding year and
were not otherwise granted. If awards lapse, expire, terminate or are canceled
prior to the issuance of shares, or if shares issued under an option are
reacquired by the Company pursuant to this Plan, those shares will be available
for new awards. Notwithstanding the foregoing, the number of Shares that may be
subject to Incentive Stock Options granted under the Plan may not exceed
2,000,000; such number may be adjusted pursuant to Section 15.

3. ADMINISTRATION OF PLAN.

     (a) The Plan shall be administered by a committee (the "Committee") of two
or more directors of the Company, none of whom shall be officers or employees of
the Company and all of whom shall be "Non-Employee Directors" with respect to
the Plan within the meaning of Rule 16b-3 under the Securities Exchange Act of
1934, and any successor rule. The members of the Committee shall be appointed by
and serve at the pleasure of the Board of Directors.

     (b) The Committee shall have plenary authority in its discretion, but
subject to the express provisions of the Plan: (i) to determine the purchase
price of the Common Shares covered by each option, (ii) to determine the
employees to whom and the time or times at which such options and awards shall
be granted and the number of shares to be subject to each, (iii) to determine
the form of payment to be made upon the exercise of an SAR or in connection with
performance awards, either cash, Common Shares of the Company or a combination
thereof, (iv) to determine the terms of exercise of each option and award, (v)
to accelerate the time at which all or any part of an option or award may be
exercised, (vi) to amend or modify the terms of any option or award with the
consent of the holder of the optionee or grantee, (vii) to interpret the Plan,
(viii) to prescribe, amend and rescind rules and regulations relating to the
Plan, (ix) to determine the






terms and provisions of each option or award agreement under the Plan (any of
which agreements need not be identical), including the designation of those
options intended to be Incentive Stock Options, (x) to delegate such of its
authority granted herein as it deems is in the best interests of the Company,
and (xi) to make all other determinations necessary or advisable for the
administration of the Plan, subject to the exclusive authority of the Board of
Directors under Section 16 herein to amend or terminate the Plan. The
Committee's determinations on the foregoing matters, unless otherwise
disapproved by the Board of Directors of the Company, shall be final and
conclusive; provided, however, that the Committee's determinations with respect
to the matters set forth in clauses (ii) and (iii) above, unless delegated as
provided in subsection 3(C) below, shall be final and conclusive without any
right of disapproval by the Board of Directors of the Company.

     (c) The Chief Executive Officer of the Company shall have the authority, as
granted by the Committee pursuant to clause (x) of the preceding subsection, to
grant, pursuant to the Plan, options or other awards to eligible persons who are
not considered by the Company as its officers or directors for purposes of
Section 16 of the Securities Exchange Act of 1934, as amended. The Chief
Executive Officer of the Company shall provide information as to any grants made
pursuant to this subsection to the Committee at its next meeting.

     (d) The Committee shall select one of its members as its Chairperson and
shall hold its meetings at such times and places as it may determine. A majority
of its members shall constitute a quorum. All determinations of the Committee
shall be made by not less than a majority of its members. Any decision or
determination reduced to writing and signed by all of the members of the
Committee shall be fully effective as if it had been made by a majority vote at
a meeting duly called and held. The grant of an option or award shall be
effective only if a written agreement shall have been duly executed and
delivered or if notice of such option or award shall have been duly communicated
by and on behalf of the Company following such grant. The Committee may appoint
a Secretary and may make such rules and regulations for the conduct of its
business as it shall deem advisable.

4. ELIGIBILITY.

     Incentive Stock Options may be granted under this Plan only to any full or
part-time employee (which term as used herein includes, but is not limited to,
officers and directors who are also employees) of the Company and of its present
and future subsidiary corporations within the meaning of Section 424(f) of the
Code (herein called "subsidiaries"). Full or part-time employees, consultants or
independent contractors to the Company or one of its subsidiaries shall be
eligible to receive awards and options which do not qualify as Incentive Stock
Options. In determining the persons to whom options and awards shall be granted
and the number of shares subject to each, the Committee may take into account
the nature of services rendered by the respective employees or consultants,
their present and potential contributions to the success of the Company and such
other factors as the Committee in its discretion shall deem relevant. A person
who has been granted an option or award under this Plan may be granted
additional options or awards under the Plan if the Committee shall so determine;
provided, however, that for Incentive Stock Options granted after December 31,
1986, to the extent the aggregate fair market value (determined at the time the
Incentive Stock Option is granted) of the Common Shares with respect to which
all Incentive Stock Options are exercisable for the first time by an employee
during any calendar year (under all plans described in subsection (d) of Section
422 of the Code of his or her employer corporation and its parent and subsidiary
corporations) exceeds $100,000, such options shall be treated as options which
do not qualify as Incentive Stock Options. Nothing in the Plan or in any
agreement thereunder shall confer on any employee any right to continue in the
employ of the Company or any of its subsidiaries or affect in any way the right
of the Company or any of its subsidiaries to terminate his or her employment at
any time.

5. PRICE.

     The option price for all Incentive Stock Options granted under the Plan
shall be determined by the Committee but shall not be less than 100% of the fair
market value of the Common Shares at the date of grant of such option. The
option price for options granted under the Plan which do not qualify as
Incentive Stock Options and, if applicable, the price for all awards shall also
be determined by the Committee. For purposes of this Section 5 and for all other
valuation purposes under the Plan, the fair market value of the Common Shares
shall be as reasonably determined by such methods or procedures as shall be
established from time to time by the Committee; provided, that for the purposes
of the first sentence of this Section 5, the fair market value of the Common
Shares shall not be less than the closing price of the stock on the date for
which fair market value is being determined, as reported on any national
securities exchange on which the Common Shares are then traded. If on the date
of grant of any option or award hereunder the Common Shares are not traded on an
established securities market, the Committee shall make a good faith attempt to
satisfy the requirements of this Section 5 and in connection therewith shall
take such action as it deems necessary or advisable.

6. TERM.

     Each option and award and all rights and obligations thereunder shall
expire on the date determined by the Committee and specified in the option or
award agreement. The Committee shall be under no duty to provide terms of like
duration for options or awards granted under the Plan, but the term of an
Incentive Stock Option may not extend more than ten (10) years from the date of
grant of such option and the term of options granted under the Plan which do not
qualify as Incentive Stock Options may not extend more than fifteen (15) years
from the date of grant of such option.

7. EXERCISE OF OPTION OR AWARD.

     (a) The Committee shall have full and complete authority to determine
whether the option or award will be exercisable in full at any time or from time
to time during the term thereof, or to provide for the exercise thereof in such
installments, upon the occurrence of such events, such as termination of
employment for any reason, and at such times during the term of the option or



                                       2



award as the Committee may determine and specify in the option or award
agreement.

     (b) The exercise of any option or award granted hereunder shall be
effective only at such time as the sale of Common Shares pursuant to such
exercise will not violate any state or federal securities or other laws. To the
extent required in order to comply with Rule 16b-3 of the Securities Exchange
Act of 1934, as amended, in the case of an option or award granted to a person
considered by the Company as one of its officers or directors for purposes of
Section 16 of the Securities Exchange Act of 1934, as amended, the terms of the
option or award will require that such shares are not disposed of by such
officer or director for a period of at least six months from the date of grant.

     (c) An optionee or grantee electing to exercise an option or award, or his
or her representative, shall give notice to the Company of such election and of
the number of shares subject to such exercise. The Company will verify the
appropriateness of the election and determine the compensation and related
withholding tax amounts. The exercise amount and applicable taxes shall be
tendered either prior to the issuance of shares pursuant to the exercise or, if
such option is exercised pursuant to a cashless exercise and sale transaction,
on or prior to the settlement date of such transaction. Payment shall be made to
the Company in cash (including wire transfer, bank check, certified check,
personal check, or money order), or, at the discretion of the Committee and as
specified by the Committee, (i) by delivering Common Shares already owned by the
optionee or grantee having a fair market value as of such date equal to the full
purchase price of the shares, together with any applicable withholding taxes, or
(ii) a combination of cash and such shares; provided, however, that an optionee
shall not be entitled to tender shares of the Company's Common Stock pursuant to
successive, substantially simultaneous exercises of options granted under this
or any other stock option plan of the Company. The fair market value of such
tendered shares shall be determined as provided in Section 5 herein. Until such
person has been issued the shares subject to such exercise, he or she shall
possess no rights as a shareholder with respect to such shares.

8. ALTERNATIVE STOCK APPRECIATION RIGHTS.

     (a) Grant. At the time of grant of an option or award under the Plan (or at
any other time), the Committee, in its discretion, may grant a Stock
Appreciation Right ("SAR") evidenced by an agreement in such form as the
Committee shall from time to time approve. Any such SAR may be subject to
restrictions on the exercise thereof as may be set forth in the agreement
representing such SAR, which agreement shall comply with and be subject to the
following terms and conditions and any additional terms and conditions
established by the Committee that are consistent with the terms of the Plan.

     (b) Exercise. An SAR shall be exercised by the delivery to the Company of a
written notice which shall state that the holder thereof elects to exercise his
or her SAR as to the number of shares specified in the notice and which shall
further state what portion, if any, of the SAR exercise amount (hereinafter
defined) the holder thereof requests be paid to him or her in cash and what
portion, if any, is to be paid in Common Shares of the Company. The Committee
promptly shall cause to be paid to such holder the SAR exercise amount, less any
applicable withholding taxes, either in cash, in Common Shares of the Company,
or in any combination of cash and shares as the Committee may determine. Such
determination may be either in accordance with the request made by the holder of
the SAR or in the sole and absolute discretion of the Committee. The SAR
exercise amount is the excess of the fair market value of one share of the
Company's Common Shares on the date of exercise over the per share exercise
price in respect of which the SAR was granted, multiplied by the number of
shares as to which the SAR is exercised. For the purposes, hereof, the fair
market value of the Company's shares shall be determined as provided in Section
5 herein.

9. RESTRICTED STOCK AWARDS.

     Awards of Common Shares subject to forfeiture and transfer restrictions may
be granted by the Committee. Any restricted stock award shall be evidenced by an
agreement in such form as the Committee shall from time to time approve, which
agreement shall comply with and be subject to the following terms and conditions
and any additional terms and conditions established by the Committee that are
consistent with the terms of the Plan:

     (a) Grant of Restricted Stock Awards. Each restricted stock award made
under the Plan shall be for such number of Common Shares as shall be determined
by the Committee and set forth in the agreement containing the terms of such
restricted stock award. Such agreement shall set forth a period of time during
which the grantee must remain in the continuous employment of the Company in
order for the forfeiture and transfer restrictions to lapse. If the Committee so
determines, the restrictions may lapse during such restricted period in
installments with respect to specified portions of the shares covered by the
restricted stock award. The agreement may also, in the discretion of the
Committee, set forth performance or other conditions that will subject the
Common Shares to forfeiture and transfer restrictions. The Committee may, at its
discretion, waive all or any part of the restrictions applicable to any or all
outstanding restricted stock awards, provided that, in the case of restricted
stock awards made to a person considered by the Company as an officer or
director for purposes of Section 16 of the Securities Act of 1934, as amended,
the terms of such restricted stock agreement will provide that the stock so
awarded may not be disposed of for a period of at least six months from the date
the award was made.

     (b) Delivery of Common Shares and Restrictions. At the time of a restricted
stock award, the number of Common Shares awarded thereunder shall be registered
in the name of the grantee. If a certificate representing such shares is issued,
such certificate shall be held by the Company or any custodian appointed by the
Company for the account of the grantee subject to the terms and conditions of
the Plan, and shall bear such a legend setting forth the restrictions imposed
thereon as the Committee, in its discretion, may determine. The grantee shall
have all rights of a shareholder with respect to the Common Shares, including
the right to receive dividends and the right to vote such shares, subject to the
following restrictions: (i) the grantee shall not be entitled to delivery of the
stock certificate, if one is issued, until the expiration of the restricted
period and the fulfillment of any other



                                       3


restrictive conditions set forth in the restricted stock agreement with respect
to such Common Shares; (ii) none of the Common Shares may be sold, assigned,
transferred, pledged, hypothecated or otherwise encumbered or disposed of during
such restricted period or until after the fulfillment of any such other
restrictive conditions; and (iii) except as otherwise determined by the
Committee, all of the shares shall be forfeited and all rights of the grantee to
such shares shall terminate, without further obligation on the part of the
Company, unless the grantee remains in the continuous employment of the Company
for the entire restricted period in relation to which such Common Shares were
granted and unless any other restrictive conditions relating to the restricted
stock award are met. Any Common Shares, any other securities of the Company and
any other property (except for cash dividends) distributed with respect to the
Common Shares subject to restricted stock awards shall be subject to the same
restrictions, terms and conditions as such restricted Common Shares.

     (c) Termination of Restrictions. At the end of the restricted period and
provided that any other restrictive conditions of the restricted stock award are
met, or at such earlier time as otherwise determined by the Committee, all
restrictions set forth in any agreement relating to the restricted stock award
or in the Plan shall lapse as to the restricted Common Shares subject thereto.
Upon payment by the grantee to the Company of any withholding tax required to be
paid, a stock certificate, if one is requested, for the appropriate number of
Common Shares, free of the restrictions and the restricted stock legend, shall
be delivered to the grantee or his or her beneficiary or estate, as the case may
be.

10. PERFORMANCE AWARDS.

     The Committee is further authorized to grant performance awards. Subject to
the terms of this Plan and any applicable award agreement, a performance award
granted under the Plan (i) may be denominated or payable in cash, Common Shares
(including, without limitation, restricted stock), other securities, other
awards, or other property and (ii) shall confer on the holder thereof rights
valued as determined by the Committee, in its discretion, and payable to, or
exercisable by, the holder of the performance awards, in whole or in part, upon
achievement of such performance goals during such performance periods as the
Committee, in its discretion, shall establish. Subject to the terms of this Plan
and any applicable award agreement, the performance goals to be achieved during
any performance period, the length of any performance period, the amount of any
performance award granted, and the amount of any payment or transfer to be made
by the grantee and by the Company under any performance award shall be
determined by the Committee.

11. INCOME TAX WITHHOLDING AND TAX BONUSES.

     (a) In order to comply with all applicable federal, state or local income
tax laws or regulations, the Company may take such action as it deems
appropriate to ensure that all applicable federal, state or local payroll,
withholding, income or other taxes, which are the sole and absolute
responsibility of an optionee or grantee under the Plan, are withheld or
collected from such optionee or grantee prior to his or her receipt of Common
Shares pursuant to the exercise of an option or the satisfaction of the
conditions of any other award. In order to assist an optionee or grantee in
paying all federal and state taxes to be withheld or collected upon exercise of
an option or award which does not qualify as an Incentive Stock Option
hereunder, the Committee, in its absolute discretion and subject to such
additional terms and conditions as it may adopt, shall permit the optionee or
grantee to satisfy such tax obligation by (i) electing to have the Company
withhold a portion of the shares otherwise to be delivered upon exercise of such
option or award with a fair market value, determined in accordance with Section
5 herein, equal to such taxes or (ii) delivering to the Company Common Shares
other than the shares issuable upon exercise of such option or award with a fair
market value, determined in accordance with Section 5, equal to such taxes. The
election must be made on or before the date that the amount of tax to be
withheld is determined.

     (b) The Committee shall have the authority, at the time of grant of an
option under the Plan or at any time thereafter, to approve tax bonuses to
designated optionees or grantees to be paid upon their exercise of options or
awards granted hereunder. The amount of any such payments shall be determined by
the Committee but shall not exceed one hundred percent (100%) of the excess of
the fair market value of the shares received upon exercise of an option or award
over the price paid therefor. The Committee shall have full authority in its
absolute discretion to determine the amount of any such tax bonus and the terms
and conditions affecting the vesting and payment thereof.

12. ADDITIONAL RESTRICTIONS.

     The Committee shall have full and complete authority to determine whether
all or any part of the Common Shares of the Company acquired upon exercise of
any of the options or awards granted under the Plan shall be subject to
restrictions on the transferability thereof or any other restrictions affecting
in any manner the optionee's or grantee's rights with respect thereto, but any
such restriction shall be contained in the agreement relating to such options or
awards.

13. TEN PERCENT SHAREHOLDER RULE.

     Notwithstanding any other provision in the Plan, if at the time an option
is otherwise to be granted pursuant to the Plan the optionee owns directly or
indirectly (within the meaning of Section 424(d) of the Code) Common Shares of
the Company possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or its parent or subsidiary
corporations (within the meaning of Section 422(b)(5) of the Code), then any
Incentive Stock Option to be granted to such optionee pursuant to the Plan shall
satisfy the requirements of Section 422(c)(5) of the Code, and the option price
shall be not less than 110% of the fair market value of the Common Shares of the
Company determined as described herein, and such option by its terms shall not
be exercisable after the expiration of five (5) years from the date such option
is granted.

14. NONTRANSFERABILITY.

     No option or award granted under the Plan shall be transferable by an
optionee or grantee, otherwise than by will or the laws of descent or
distribution. Except as otherwise provided



                                       4


in an option or award agreement, during the lifetime of an optionee or grantee,
the option or award shall be exercisable only by such optionee or grantee. The
Committee shall have the authority to waive the provisions of this Section with
respect to any grant of options under the Plan subject to such terms, conditions
or limitations as they may, in their discretion impose.

15. DILUTION OR OTHER ADJUSTMENTS.

     If there shall be any change in the Common Shares through merger,
consolidation, reorganization, recapitalization, dividend in the form of stock
(of whatever amount), stock split or other change in the corporate structure,
appropriate adjustments in the Plan and outstanding options and awards shall be
made by the Committee. In the event of any such changes, adjustments shall
include, where appropriate, changes in the aggregate number of shares subject to
the Plan, the number of shares and the price per share subject to outstanding
options and awards and the amount payable upon exercise of outstanding awards,
in order to prevent dilution or enlargement of option or award rights.

16. AMENDMENT OR DISCONTINUANCE OF PLAN.

     The Board of Directors may amend or discontinue the Plan at any time.
Subject to the provisions of Section 15 no amendment of the Plan, however, shall
without shareholder approval: (a) increase the number of shares authorized under
the Plan as provided in Section 2 herein, (b) decrease the minimum price
provided in Section 5 herein, (c) extend the maximum term under Section 6, or
(d) modify the eligibility requirements for participation in the Plan. The
Committee, or the Company's Chief Executive Officer as authorized by the
Committee, may grant, each year, options and awards for the number of shares
authorized by Section 2 herein without further amendment to the Plan increasing
the number of shares authorized for distribution. The Board of Directors shall
not alter or impair any option or award theretofore granted under the Plan
without the consent of the holder of the option or award.

17. TIME OF GRANTING.

     Nothing contained in the Plan or in any resolution adopted or to be adopted
by the Board of Directors or by the shareholders of the Company, and no action
taken by the Committee, the Chief Executive Officer or the Board of Directors
(other than the execution and delivery of an option or award agreement), shall
constitute the granting of an option or award hereunder.

18. EFFECTIVE DATE AND TERMINATION OF PLAN.

     (a) The Plan was approved by the Board of Directors on February 15, 1993,
and shall be approved by the shareholders of the Company within twelve (12)
months thereof.

     (b) Unless the Plan shall have been discontinued as provided in Section 16
hereof, the Plan shall terminate on February 14, 2003. No option or award may be
granted after such termination, but termination of the Plan shall not, without
the consent of the optionee or grantee, alter or impair any rights or
obligations under any option or award theretofore granted.

19. OPTION AND AWARD LIMITATIONS UNDER THE PLAN.

     No participant who is an employee of the Company at the time of grant may
be granted an option or award the value of which is based solely on an increase
in the value of the shares after the date of grant of such option or awards for
more than 2,000,000 shares, in the aggregate, in any one calendar year period
beginning with the period commencing on January 1, 1996 and ending December 31,
1996. The foregoing annual limitation specifically includes the grant of any
options or awards representing qualified performance-based compensation within
the meaning of Section 162(m) of the Code.



                                        5

EX-10.(C)

                                                                   EXHIBIT 10(c)

                         UNITEDHEALTH GROUP INCORPORATED
                     NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
                 AMENDED AND RESTATED EFFECTIVE OCTOBER 30, 2001

SECTION 1. PURPOSE.

         This plan shall be known as the "UnitedHealth Group Incorporated
Nonemployee Director Stock Option Plan, Amended and Restated Effective October
30, 2001" and is hereinafter referred to as the "Plan." The purpose of the Plan
is to promote the interests of UnitedHealth Group Incorporated, a Minnesota
corporation (the "Company"), by enhancing its ability to attract and retain the
services of experienced and knowledgeable independent directors and by providing
additional incentive for these directors to increase their interest in the
Company's long-term success and progress. Nonqualified stock options or
restricted stock may be granted under the Plan.

SECTION 2. ADMINISTRATION.

         The Plan shall be administered by a committee (the "Committee") of two
or more persons appointed by the Board of Directors of the Company. Except as
set forth in Section 6(c) hereof, grants of stock options under the Plan and the
amount and nature of the awards to be granted shall be automatic as described in
Sections 6(a) and 6(b). Grants of restricted stock under the Plan and the amount
and nature of restricted stock to be granted shall be at the discretion of the
Committee. All questions of interpretation of the Plan or of any options or
restricted stock granted under it shall be determined by the Committee and such
determination shall be final and binding upon all persons having an interest in
the Plan.

SECTION 3. PARTICIPATION IN THE PLAN.

         Each director of the Company shall be eligible to participate in the
Plan unless such director is also an employee of the Company or any subsidiary
or affiliate of the Company. Notwithstanding the foregoing, no single director
shall be eligible to acquire under the Plan more than 1% of the shares of the
Company's common stock outstanding as of May 12, 1999.

SECTION 4. STOCK SUBJECT TO THE PLAN.

         Subject to the provisions of Section 11 hereof, the stock to be subject
to grants under the Plan shall be authorized but unissued shares of the
Company's common stock, par value $.01 per share (the "Common Stock"). Subject
to adjustment as provided in Section 11 hereof, the maximum number of shares
with respect to which grants may be authorized under this Plan shall be
1,700,000 shares of Common Stock. If a grant under the Plan expires or for any
reason is terminated prior to the exercise of an option or the lapse of a
restriction on the shares underlying a restricted stock grant, the shares





underlying such grant shall again be available for grants thereafter during the
term of the Plan.

SECTION 5. NONQUALIFIED STOCK OPTIONS.

         All options granted under the Plan shall be nonqualified stock options
that do not qualify as incentive stock options within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended.

SECTION 6. TERMS AND CONDITIONS OF OPTIONS.

         Each option granted under this plan may, but is not required to, be
evidenced by a written agreement or certificate in such form as the Committee
shall from time to time approve. Each option granted under this plan shall
comply with and be subject to the following terms and conditions:

      a) Annual Option Grants. Each eligible director of the Company in office
         on the first business day immediately following each annual meeting of
         the Company's shareholders (the "Annual Option Grant Date") held during
         the term of the Plan shall be granted automatically an option to
         purchase 10,000 shares of Common Stock (the "Annual Option Grant"),
         granted in 4 installments of 2,500 each on the first business day of
         each fiscal quarter following the Annual Option Grant Date. A director
         must be in office on the day of each installment of the Annual Option
         Grant or that installment will be forfeited. Notwithstanding the
         foregoing, no director shall be granted an Annual Option Grant if such
         director has been granted an option under Section 6(b) hereof within 12
         months of such Annual Option Grant Date. Each option granted pursuant
         to this Section 6(a) shall have an exercise price as determined
         pursuant to Section 7 hereof.

      b) Initial Option Grants. Each eligible director of the Company that is
         elected to the Board of Directors shall be granted automatically on the
         date that the director is elected to the Board of Directors an option
         to purchase 18,000 shares of Common Stock. Notwithstanding Section
         6(f), the options granted pursuant to this Section 6(b) shall not be
         exercisable for a period of one year after the date on which they were
         granted, but thereafter will become exercisable as to one-third of the
         shares covered by the option on each anniversary date of the option
         grant. Each option granted pursuant to this Section 6(b) shall have an
         exercise price as determined pursuant to Section 7 hereof.

      c) Stock Option Conversion Program. Each eligible director of the Company
         in office on the last business day of any calendar year may elect to
         convert into options to purchase Common Stock any percentage of the
         annual retainer and Board of Director and committee meeting fees to be
         paid to such director in the following year (the "Conversion Option").
         With respect to any eligible director who is not a director on the last
         business day of any calendar year, such director shall have thirty (30)
         days after his or her election as a director in which to elect

                                       2



         the Conversion Option. Options granted pursuant to this Section 6(c)
         shall be granted on the dates of regularly scheduled Board of Director
         meetings, and each such option shall enable the holder thereof to
         purchase that number of shares of Common Stock as is equal to (i) four
         (4) times the sum of (A) the annual retainer that would have been
         received by the electing director (including any retainer that would
         have been received for acting as the chairperson of any committee of
         the Board of Directors), had such director not elected the Conversion
         Option, divided by the number of regularly scheduled Board of Director
         meetings for the calendar year and (B) the total Board of Director and
         committee meeting fees that would have been received by such director,
         had such director not elected the Conversion Option, for meetings
         attended subsequent to the date of the immediately preceding regularly
         scheduled Board of Directors meeting but prior to and including the
         date of the regularly scheduled Board of Directors meeting on which
         such option is to be granted, divided by (ii) the closing per share
         price of Common Stock on the date of grant; provided, however, that if
         such number is not a multiple of ten (10), such number shall be rounded
         up to the nearest multiple of ten (10) exceeding such number.

      d) Options Non-Transferable. No option granted under the Plan shall be
         transferable by the optionee otherwise than by will or by the laws of
         descent and distribution as provided in Section 6(g) hereof. During the
         lifetime of the optionee, the options shall be exercisable only by such
         optionee. No option or interest therein may be transferred, assigned,
         pledged or hypothecated by the optionee during such optionee's
         lifetime, whether by operation of law or otherwise, or be made subject
         to execution, attachment or similar process. The Committee shall have
         the authority to waive the provisions of this Section with respect to
         any grant of options under the Plan subject to such terms, conditions
         or limitations as they may, in their discretion, impose.

      e) Period of Options. Options shall terminate upon the expiration of 10
         years from the date on which they were granted.

      f) Exercise of Options.

         i.       Options granted under the Plan shall not be exercisable for a
                  period of six months after the date on which they were
                  granted, but thereafter will be exercisable in full at any
                  time or from time to time during the term of the option,
                  provided that options granted under the Plan may become fully
                  exercisable upon a director's resignation from the Board of
                  Directors or the death of the optionee.

         ii.      The exercise of any option granted hereunder shall only be
                  effective at such time as counsel to the Company shall have
                  determined that the issuance and delivery of Common Stock
                  pursuant to such exercise will not violate any federal or
                  state securities or other laws. An optionee desiring to
                  exercise an option may be required by the Company, as a
                  condition of


                                       3



                  the effectiveness of any exercise of an option granted
                  hereunder, to agree in writing that all Common Stock to be
                  acquired pursuant to such exercise shall be held for his or
                  her own account without a view to any distribution thereof,
                  that the certificates that may be issued for such shares shall
                  bear an appropriate legend to that effect and that such shares
                  will not be transferred or disposed of except in compliance
                  with applicable federal and state securities laws.

         iii.     An optionee electing to exercise an option, or his or her
                  representative, shall give notice to the Company of such
                  election and of the number of shares subject to such exercise.
                  The full purchase price of such shares shall be tendered
                  either prior to the issuance of shares pursuant to the
                  exercise or, if such option is exercised pursuant to a
                  cashless exercise and sale transaction, on or prior to the
                  settlement date of such transaction. Payment shall be made to
                  the Company in cash (including check, bank draft, money order
                  or wire transfer).

      g) Effect of Death. If the optionee shall die prior to the time the option
         is fully exercised, such option may be exercised at any time within one
         year after his or her death by the personal representatives or
         administrators of the optionee or by any person or persons to whom the
         option is transferred by will or the applicable laws of descent and
         distribution, to the extent of the full number of shares the optionee
         was entitled to purchase under the option on the date of death and
         subject to the condition that no option shall be exercisable after the
         expiration of the term of the option.

SECTION 7. OPTION EXERCISE PRICE.

         The option exercise price per share for the shares covered by each
option shall be equal to the "fair market value" of a share of Common Stock as
of the date on which the option is granted. For purposes of Section 6(a), the
date on which the option is granted shall be the date of each quarterly
installment. For the purposes of the Plan, the fair market value of the Common
Stock on a given date shall be the closing price of the Common Stock on such
date on the New York Stock Exchange, Inc. (the "NYSE") Composite Tape, if the
Common Stock is then being traded on the NYSE. If on the date as of which the
fair market value is being determined the Common Stock is not publicly traded,
the Committee shall make a good faith attempt to determine such fair market
value and, in connection therewith, shall take such actions and consider such
factors as it deems necessary or advisable.

SECTION 8. GRANTS OF RESTRICTED STOCK

         The Committee may grant restricted stock to eligible directors from
time to time in its discretion. Any grant of restricted stock shall be evidenced
by an agreement in such form as the Committee shall from time to time approve,
which agreement shall comply


                                       4



with and be subject to the following terms and conditions and any additional
terms and conditions established by the Committee that are consistent with the
terms of the Plan:

      a) Grant of Restricted Stock. Each grant of restricted stock under the
         Plan shall be for such number of shares of Common Stock as shall be
         determined by the Committee and set forth in an agreement containing
         the terms of the restricted stock grant. Each agreement shall set forth
         the restrictions which apply to the grant of restricted stock and the
         circumstances under which such restrictions lapse. The Committee may,
         in its discretion, waive any or all of the restrictions applicable to
         any or all outstanding grants of restricted stock, provided that for
         purposes of Section 16 of the Securities Exchange Act of 1934, as
         amended (the "Exchange Act"), restricted stock may not be transferable
         for a period of at least six months from the date of the grant.

      b) Delivery of Common Shares and Restrictions. At the time of a restricted
         stock grant, the number of shares of Common Stock granted thereunder
         shall be registered in the name of the grantee. If a certificate
         representing such shares is issued, such certificate shall bear a
         legend referencing the restrictions imposed thereon as the Committee,
         in its discretion, may determine. The grantee shall have all rights of
         a shareholder with respect to the restricted stock granted, including
         the right to receive dividends and the right to vote such shares,
         provided, however, that none of the shares of restricted stock may be
         sold, assigned, transferred, pledged, hypothecated or otherwise
         encumbered or disposed of during such restricted period or until after
         the fulfillment of any such other restrictive conditions. Any other
         securities of the Company and any other property (except for cash
         dividends) distributed with respect to the restricted stock shall be
         subject to the same restrictions, terms and conditions as the
         restricted stock.

      c) Termination of Restrictions. At the end of the restricted period and
         provided that any other restrictive conditions of the restricted stock
         are met, or at such earlier time as otherwise determined by the
         Committee, all restrictions set forth in the agreement relating to the
         restricted stock award or in the Plan shall lapse as to the restricted
         stock subject thereto.

SECTION 9. TIME FOR GRANTING OPTIONS.

         Unless the Plan shall have been discontinued as provided in Section 12
hereof, the Plan shall terminate upon the expiration of 10 years from the date
upon which it takes effect as provided in Section 12 hereof. No grants shall be
made after such termination, but termination of the Plan shall not, without the
consent of the grantee, alter or impair any rights or obligations under any
option or restricted stock theretofore granted.

SECTION 10. LIMITATION OF RIGHTS.

      a) No Right to Continue as a Director. Neither the Plan, nor the granting
         of an option or restricted stock nor any other action taken pursuant to
         the Plan, shall constitute,


                                       5



         or be evidence of, any agreement or understanding, express or implied,
         that the Company will retain a director for any period of time, or at
         any particular rate of compensation.

      b) No Shareholder Rights for Options. An optionee shall have no rights as
         a shareholder with respect to the shares covered by options until the
         date of the issuance to such optionee of a stock certificate therefor,
         and no adjustment will be made for cash dividends or other rights for
         which the record date is prior to the date such certificate is issued.

SECTION 11. ADJUSTMENTS TO COMMON STOCK.

         If there shall be any change in the Common Stock through merger,
consolidation, reorganization, recapitalization, stock dividend (of whatever
amount), stock split or other change in the corporate structure, appropriate
adjustments in the Plan and outstanding options shall be made. In the event of
any such changes, adjustments shall include, where appropriate, changes in the
aggregate number of shares subject to the Plan, the number of shares subject to
outstanding grants and the option exercise prices thereof in order to prevent
dilution or enlargement of rights previously granted.

SECTION 12. EFFECTIVE DATE OF THE PLAN.

         The Plan shall take effect immediately upon its approval by the
affirmative vote of the holders of a majority of the shares present in person or
by proxy and voted at a duly held meeting of shareholders of the Company.

SECTION 13. AMENDMENT OF THE PLAN.

         The Board may suspend or discontinue the Plan or revise or amend it in
any respect whatsoever; provided, however, that without approval of the
shareholders of the Company no revision or amendment shall be made that (a)
absent such shareholder approval, would cause Rule 16b-3 of the Exchange Act, or
any successor rule or regulation thereto, to become unavailable with respect to
the Plan, or (b) requires the approval of the Company's shareholders under any
rules or regulations of the NYSE that are applicable to the Company. The Board
shall not alter or impair any grant previously granted under the Plan without
the consent of the grantee.

SECTION 14. GOVERNING LAW.

         The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of Minnesota and construed
accordingly.

SECTION 15. COMPLIANCE WITH EXCHANGE ACT.

         Transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent
any provision of


                                       6



the Plan or action by the Committee fails to so comply, such provision or action
shall be deemed null and void to the extent permitted by law and deemed
advisable by the Committee.


                                       7

EX-10.(E)

                               UNITEDHEALTH GROUP
                             EXECUTIVE SAVINGS PLANS
                                (1998 Statement)

                               UNITEDHEALTH GROUP
                             EXECUTIVE SAVINGS PLANS
                                (1998 STATEMENT)


                                TABLE OF CONTENTS




                                                                                                            PAGE
                                                                                                         
SECTION 1.       INTRODUCTION AND DEFINITIONS............................................................      1

                 1.1.     Restatement of Plans
                 1.2.     Definitions
                          1.2.1.       Account
                          1.2.2.       Affiliate
                          1.2.3.       Annual Valuation Date
                          1.2.4.       Beneficiary
                          1.2.5.       Board of Directors or Board
                          1.2.6.       CEO
                          1.2.7.       Code
                          1.2.8.       Committee
                          1.2.9.       Disability
                          1.2.10.      Effective Date
                          1.2.11.      Eligible Grade Level
                          1.2.12.      Employers
                          1.2.13.      ERISA
                          1.2.14.      Incentive Award
                          1.2.15.      Participant
                          1.2.16.      Plans
                          1.2.17.      Plan  Statement
                          1.2.18.      Plan Year
                          1.2.19.      Section 16 Officer
                          1.2.20.      SLTEC Bonus
                          1.2.21.      Termination of Employment
                          1.2.22.      UnitedHealth Group or UHG
                          1.2.23.      Valuation Date
                   1.3.   Transitional Rules
                          1.3.1.       Participation Requirements
                          1.3.2.       One-Year Wait for Matching Credits
                          1.3.3.       10-Year Installments
                          1.3.4.       Delayed Lump Sum
                          1.3.5.       Three (3) Annual Installments
                          1.3.6.       Pre-Selected In-Service Distributions



                                      -i-

                                                                                                         
                          1.3.7.       On Demand In-Service Distributions
                          1.3.8.       In-Service Distribution for Financial Hardship
                          1.3.9.       Special Restructure Rule

SECTION 2.       ELIGIBILITY TO PARTICIPATE..............................................................      5

                 2.1.     General Eligibility Rule
                 2.2.     Immediate Eligibility for Executive Leadership Team
                 2.3.     Selection for Participation in the Plan

SECTION 3.       AUTOMATIC RESTORATION OPTION PLAN.......................................................      6

                 3.1.     Automatic Enrollment
                 3.2.     Voluntary Enrollment if Over 402(g) Limit at Hire
                 3.3.     Election Out
                 3.4.     Crediting to Accounts
                 3.5.     Matching Credits

SECTION 4.       INCENTIVE DEFERRAL OPTION AND SALARY DEFERRAL
                 OPTION PLAN.............................................................................      7

                 4.1.     Incentive Deferral Option
                          4.1.1.       Amount of Deferrals
                          4.1.2.       Crediting to Accounts
                          4.1.3.       Matching Credits
                 4.2.     Salary Deferral Option
                          4.2.1.       Amount of Deferrals
                          4.2.2.       Crediting to Accounts
                          4.2.3.       No Matching Credits
                 4.3.     Limited Bonus Deferral Option
                          4.3.1.       Amount of Deferrals
                          4.3.2.       Crediting to Accounts
                          4.3.3.       No Matching Credits
                 4.4.     Supplemental Long Term Executive Compensation Deferral Option
                          4.4.1.       Amount of Deferrals
                          4.4.2.       Crediting to Accounts
                          4.4.3.       No Matching Credits
                 4.5.     Employer Discretionary Supplements

SECTION 5.       CREDITS FROM MEASURING INVESTMENTS......................................................      9

                 5.1.     Designation of Measuring Investments
                 5.2.     UHG Stock as Measuring Investment
                 5.3.     Operational Rules for Measuring Investments




                                      -ii-

                                                                                                         
SECTION 6.       OPERATIONAL RULES.......................................................................     10

                 6.1.     Operational Rules for Deferrals
                 6.2.     Establishment of Accounts
                 6.3.     Accounting Rules

SECTION 7.       VESTING OF ACCOUNTS.....................................................................     11


SECTION 8.       SPENDTHRIFT PROVISION...................................................................     11


SECTION 9.       DISTRIBUTIONS...........................................................................     11

                 9.1.     Time of Distribution to Participant
                          9.1.1.       General Rule
                          9.1.2.       No Application for Distribution Required
                          9.1.3.       Code Section 162(m) Delay
                          9.2.         Form of Distribution
                 9.3.     Election of Form of Distribution by Participant
                          9.3.1.       Election at Initial Enrollment
                          9.3.2.       Default Election of Form of Distribution
                          9.3.3.       Periodic Re-Election
                 9.4.     Payment to Beneficiary Upon Death of Participant
                          9.4.1.       Payment to Beneficiary When Death Occurs Before Termination
                                       of Employment
                          9.4.2.       Payment to Beneficiary When Death Occurs After Termination
                                       of Employment
                          9.4.3.       Beneficiary Must Apply for Distribution
                          9.4.4.       Election of Measuring Investments by Beneficiaries
                 9.5.     Designation of Beneficiaries
                          9.5.1.       Right to Designate
                          9.5.2.       Failure of Designation
                          9.5.3.       Disclaimers by Beneficiaries
                          9.5.4.       Definitions
                          9.5.5.       Special Rules
                 9.6.     Death Prior to Full Distribution
                 9.7.     Facility of Payment
                 9.8.     In-Service Distributions
                          9.8.1.       Pre-Selected In-Service Distributions.
                          9.8.2.       On Demand In-Service Distributions
                          9.8.3.       In-Service Distribution for Financial Hardship
                 9.9.     Distributions in Cash

SECTION 10.      FUNDING OF PLAN.........................................................................     21

                 10.1.    Unfunded Plan
                 10.2.    Corporate Obligation




                                     -iii-

                                                                                                         
SECTION 11.      AMENDMENT AND TERMINATION...............................................................     21

                 11.1.    Amendment and Termination
                 11.2.    Special Rule for Section 16 Officers
                 11.3.    No Oral Amendments
                 11.4.    Plan Binding on Successors

SECTION 12.      DETERMINATIONS -- RULES AND REGULATIONS.................................................     22

                 12.1.    Determinations
                 12.2.    Rules and Regulations
                 12.3.    Method of Executing Instruments
                 12.4.    Claims Procedure
                          12.4.1.      Original Claim
                          12.4.2.      Review of Denied Claim
                          12.4.3.      General Rules
                 12.5.    Limitations and Exhaustion
                          12.5.1.      Limitations
                          12.5.2.      Exhaustion Required

SECTION 13.      PLAN ADMINISTRATION.....................................................................     25

                 13.1.    Officers
                 13.2.    Chief Executive Officer
                 13.3.    Board of Directors
                 13.4.    Committee
                 13.5.    Delegation
                 13.6.    Conflict of Interest
                 13.7.    Administrator
                 13.8.    Service of Process
                 13.9.    Expenses
                 13.10.   Tax Withholding
                 13.11.   Certifications
                 13.12.   Errors in Computations

SECTION 14.      CONSTRUCTION............................................................................     27

                 14.1.    Applicable Laws
                          14.1.1.      Separate Plans
                          14.1.2.      ERISA Status
                          14.1.3.      IRC Status
                          14.1.4.      Securities Laws Compliance
                          14.1.5.      References to Laws
                 14.2.    Effect on Other Plans
                 14.3.    Disqualification
                 14.4.    Rules of Document Construction




                                      -iv-

                                                                                                         
                 14.5.    Choice of Law
                 14.6.    No Employment Contract

SCHEDULE I  -    EMPLOYERS PARTICIPATING IN THE UNITEDHEALTH GROUP EXECUTIVE SAVINGS PLANS...............   SI-1

SCHEDULE II  -   MEASURING INVESTMENTS...................................................................  SII-1





                                      -v-

                               UNITEDHEALTH GROUP
                             EXECUTIVE SAVINGS PLANS
                                (1998 STATEMENT)


                                   SECTION 1

                          INTRODUCTION AND DEFINITIONS

1.1. RESTATEMENT OF PLANS. UNITEDHEALTH GROUP INCORPORATED (formerly known as
United Healthcare Corporation), a Minnesota corporation (hereinafter sometimes
referred to as "UHG"), as plan sponsor, hereby restates two previously
established nonqualified, unfunded, deferred compensation plans for the benefit
of a select group of management or highly compensated employees of the
Employers: (1) the Automatic Restoration Option Plan, and (2) the Incentive
Deferral, Salary Deferral and Limited Bonus Deferral Option Plan.

1.2. DEFINITIONS. When the following terms are used herein with initial capital
letters, they shall have the following meanings:

         1.2.1. ACCOUNT -- the separate bookkeeping account established for each
Participant which represents the separate unfunded and unsecured general
obligation of the Employers established with respect to each person who is a
Participant in this Plan in accordance with Section 2 and to which are credited
the dollar amounts specified in Sections 3, 4 and 5 and from which are
subtracted payments made pursuant to Section 9.

         1.2.2. AFFILIATE -- a business entity which is not an Employer but
which is part of a "controlled group" with the Employer or under "common
control" with an Employer or which is a member of an "affiliated service group"
that includes an Employer, as those terms are defined in section 414(b), (c) and
(m) of the Code. A business entity which is a predecessor to an Employer shall
be treated as an Affiliate if the Employer maintains a plan of such predecessor
business entity or if, and to the extent that, such treatment is otherwise
required by regulations under section 414(a) of the Code. A business entity
shall also be treated as an Affiliate if, and to the extent that, such treatment
is required by regulations under section 414(o) of the Code. In addition to said
required treatment, the Committee may, in its discretion, designate as an
Affiliate any business entity which is not such a "controlled group," "common
control," "affiliated service group" or "predecessor" business entity but which
is otherwise affiliated with an Employer, subject to such limitations as the
Committee may impose.

         1.2.3. ANNUAL VALUATION DATE -- each December 31.

         1.2.4. BENEFICIARY -- a person designated by a Participant (or
automatically by operation of the Plan Statement) to receive all or a part of
the Participant's Account in the event of the Participant's death prior to full
distribution thereof. A person so designated shall not be considered a
Beneficiary until the death of the Participant.

         1.2.5. BOARD OF DIRECTORS OR BOARD -- the Board of Directors of UHG or
its successor. "Board of Directors" shall also mean and refer to any properly
authorized committee of the Board of Directors.

         1.2.6. CEO -- the Chief Executive Officer of UHG or his or her delegee
for Plan purposes.

         1.2.7. CODE -- the Internal Revenue Code of 1986, as amended.

         1.2.8. COMMITTEE -- the UnitedHealth Group Employee Benefits Committee
(also known as the "EBC") consisting of one or more members appointed by and
serving at the pleasure of the CEO.

         1.2.9. DISABILITY -- a medically determinable physical or mental
impairment which: (i) renders the individual incapable of performing any
substantial gainful employment, (ii) can be expected to be of long-continued and
indefinite duration or result in death, and (iii) is evidenced by a
certification to this effect by a doctor of medicine approved by the Committee.
In lieu of such a certification, the Committee may accept, as proof of
Disability, the official written determination that the individual will be
eligible for disability benefits under the federal Social Security Act as now
enacted or hereinafter amended (when any waiting period expires). The Committee
shall determine the date on which the Disability shall have occurred if such
determination is necessary.

         1.2.10. EFFECTIVE DATE -- January 1, 1998 (except as otherwise
specified in this Plan Statement, including Section 1.3).

         1.2.11. ELIGIBLE GRADE LEVEL --

         (a)      ON OR AFTER JANUARY 1, 2000. For Plan Years commencing on or
                  after January 1, 2000, for regular full-time or part-time
                  employees: the Executive Leadership Team; Salary Grades 31 and
                  32 (but only if base salary is equal to or exceeds any
                  specific compensation criteria established by the Committee);
                  and Medical Director Grades M2, M3 and M4 (but only if base
                  salary is equal to or exceeds any specific compensation
                  criteria established by the Committee).

         (b)      PRIOR TO JANUARY 1, 2000. For Plan Years commencing prior to
                  January 1, 2000, for regular full-time employees: the
                  Executive Leadership Team or executive career band; Salary
                  Grades 31 and 32 (but only if base salary is equal to or
                  exceeds any specific compensation criteria established by the
                  Committee); Medical Director Grades M2, M3 and M4; and
                  Clinical Medical Staff Grades CD-2, CD-3, CM-2 and CM-3.

         (c)      AUTHORITY TO MAKE CHANGES. Notwithstanding the foregoing, the
                  Committee may from time to time in its discretion modify the
                  applicable



                                      -2-

                  eligible grade levels, the compensation criteria and the
                  full-time and part-time criteria.

         1.2.12. EMPLOYERS -- UHG; each business entity listed as an Employer in
the Schedule I to this Plan Statement; any other business entity that employs
persons who are selected for participation under Section 2.3 of in this Plan;
and any successor thereof.

         1.2.13. ERISA -- the Employee Retirement Income Security Act of 1974,
as amended.

         1.2.14. INCENTIVE AWARD -- any incentive awards that were payable in
calendar years prior to 2000 under the Management Incentive Plan, that are
payable in 2000 through 2002 under the Leadership Results Plan, that are payable
in 2003 or later years under the Rewarding Results Plan, and any comparable
successor plan.

         1.2.15. PARTICIPANT -- an employee of an Employer who is selected for
participation in this Plan in accordance with the provisions of Section 2 and
who either has been automatically enrolled under Section 3 or has elected to
defer compensation under Section 4. An employee who has become a Participant
shall continue to be a Participant in this Plan until the date of the
Participant's death or, if earlier, the date when the Participant has received a
distribution of the Participant's entire Account.

         1.2.16. PLANS -- the two nonqualified, unfunded, deferred compensation
programs maintained by the Employers for the benefit of Participants eligible to
participate therein, as set forth in this Plan Statement: (1) the Automatic
Restoration Option Plan (which is attributable to credits to Accounts described
in Section 3), and (2) the Incentive Deferral, Salary Deferral and Limited Bonus
Deferral Option Plan (which is attributable to credits to Accounts described in
Section 4). (As used herein, "Plans" does not refer to the document pursuant to
which the Plans are maintained. That document is referred to herein as the "Plan
Statement".) The Plans taken together shall be referred to as the "UnitedHealth
Group Executive Savings Plans."

         1.2.17. PLAN STATEMENT -- this document entitled "UnitedHealth Group
Executive Savings Plans (1998 Statement)" as adopted by the Committee and
generally effective as of January 1, 1998, as the same may be amended from time
to time thereafter.

         1.2.18. PLAN YEAR -- the twelve (12) consecutive month period ending on
any Annual Valuation Date.

         1.2.19. SECTION 16 OFFICER -- an officer of an Employer who is subject
to the provisions of Section 16 of the Securities Exchange Act of 1934, as
amended.

         1.2.20. SLTEC BONUS -- any awards or bonuses that may become payable in
2001 or any later year under the UnitedHealth Group Incorporated Supplemental
Long Term Executive Compensation Plan or any comparable successor plan.


                                      -3-

         1.2.21. TERMINATION OF EMPLOYMENT -- a complete severance of an
employee's employment relationship with the Employers and all Affiliates, for
any reason other than the employee's death. A transfer from employment with an
Employer to employment with another Employer or an Affiliate of an Employer
shall not constitute a Termination of Employment. If an Employer who is an
Affiliate ceases to be an Affiliate because of a sale of substantially all the
stock or assets of the Employer, then Participants who are employed by that
Employer and who cease to be employed by an Employer on account of such sale
shall be deemed to have thereby had a Termination of Employment for the purpose
of commencing distributions from this Plan.

         1.2.22. UNITEDHEALTH GROUP OR UHG -- UNITEDHEALTH GROUP INCORPORATED, a
Minnesota corporation, or any successor thereto.

         1.2.23. VALUATION DATE -- any day that the U.S. securities markets are
open and conducting business.

1.3. TRANSITIONAL RULES. Notwithstanding the general effective date of Section
1.2.10 of this Plan Statement, the following special effective dates shall also
apply:

         1.3.1. PARTICIPATION REQUIREMENTS. For the Plan Year beginning January
1, 1998, Eligible Grade Level shall mean an employee of an Employer who has at
least thirty (30) days of service in one of the following classes: Grades 33 and
above; Medical Directors M2-M4; or Clinical Medical Staff CD2-3 and CM2-3. For
the Plan Year beginning January 1, 1999, Eligible Grade Level shall mean a
regular full-time or part-time employee of an Employer who has at least thirty
(30) days of service in one of the following classes: the Executive Career Band;
Grades 31 and 32 (but only if base salary is equal to or exceeds the specific
compensation criteria established by the Committee); Medical Directors M2-M4;
and Clinical Medical Staff CD2-3 and CM2-3. Notwithstanding the foregoing, for
Plan Years beginning on January 1, 2000, and later, the thirty (30) day service
requirement no longer applies.

         1.3.2. ONE-YEAR WAIT FOR MATCHING CREDITS. Prior to January 1, 2001, a
Participant was required to complete one year of service before the Participant
was eligible to receive matching credits described in Sections 3.5 and 4.1.3.
Effective January 1, 2001, the year of service requirement no longer applies and
Participants are immediately eligible for such matching credits.

         1.3.3. 10-YEAR INSTALLMENTS. The ten (10) annual installment
distribution option under Section 9.2 is effective only for Participants who
first enroll or are deemed to have enrolled in the Plan for a Plan Year that
commences on or after January 1, 2001 (the "Restructure Date").

         1.3.4. DELAYED LUMP SUM. The delayed lump sum distribution option
described in Section 9.2(c) of the Plan Statement is effective only for
Participants who first enroll or are deemed to have enrolled in the Plan for a
Plan Year that commences on or after January 1, 2001 (the "Restructure Date").


                                      -4-

         1.3.5. THREE (3) ANNUAL INSTALLMENTS. For Plan Years that commenced
prior to January 1, 2001, Participants could elect distribution of their
Accounts in the form of three (3) annual installments. The three (3) annual
installment distribution option is no longer available effective with the first
day of the enrollment period for the 2001 Plan Year; provided, however, that
three (3) annual installment elections that were made by those Participants who
enrolled in the Plan and elected the three (3) annual installment distribution
option prior to the first day of the enrollment period of the 2001 Plan Year,
shall continue to be effective until subsequently changed by the Participant in
accordance with the terms of the Plan Statement.

         1.3.6. PRE-SELECTED IN-SERVICE DISTRIBUTIONS. Section 9.8.1 of the Plan
Statement is effective for Plan Years commencing on or after January 1, 2001.

         1.3.7. ON DEMAND IN-SERVICE DISTRIBUTIONS. Section 9.8.2 of the Plan
Statement is effective for Plan Years commencing on or after January 1, 2001.

         1.3.8. IN-SERVICE DISTRIBUTION FOR FINANCIAL HARDSHIP. Section 9.8.3 of
the Plan Statement is effective for Plan Years commencing on or after January 1,
2001.

         1.3.9. SPECIAL RESTRUCTURE RULE. Notwithstanding the effective dates in
Sections 1.3.3, 1.3.4 and 1.3.6, employees who were Participants in the Plan
before January 1, 2001, shall have a one-time opportunity, under rules
established by the Committee, to elect a new form of distribution under Section
9.2 and to elect a pre-selected distribution under Section 9.8.1. Specifically,
employees who were Participants in the Plan before January 1, 2001, shall be
eligible to make a one-time election to receive a pre-selected in-service
distribution of all or part of such Participant's Account as of January 1, 2004
or, any later date specified by the Participant. Any such election made by the
Participant must be submitted to the Committee by December 15, 2000, or such
other date designated by the Committee.

                                   SECTION 2

                           ELIGIBILITY TO PARTICIPATE

2.1. GENERAL ELIGIBILITY RULE. An employee of an Employer who is in an Eligible
Grade Level during a Plan Year and who is selected for participation (as
described in Section 2.3) shall be eligible to become a Participant as of the
first day of the Plan Year following the Plan Year in which such selection
occurs (unless the Committee or the Board of Directors designates a different
date).

2.2. IMMEDIATE ELIGIBILITY FOR EXECUTIVE LEADERSHIP TEAM. An employee of an
Employer who is a member of the Executive Leadership Team or a comparable
successor group and who is selected (as described in Section 2.3 below) for
participation by the Committee (or, for a Section 16 Officer, by the Board of
Directors) shall be eligible to become a Participant as soon as administratively
feasible following such selection (unless the Committee or the Board of
Directors designates a different date).


                                      -5-

2.3. SELECTION FOR PARTICIPATION IN THE PLAN. Only employees who are selected
for participation in this Plan by the Committee (or, for a Section 16 Officer,
by the Board of Directors) shall be eligible to become a participant in this
Plan. The Committee shall not select any employee for participation unless the
Committee determines that such employee is a member of a select group of
management or highly compensated employees (as that expression is used in
ERISA). The Committee may determine that a Participant is not eligible for
automatic deferral or matching credits under the Automatic Restoration Option in
Section 3 for any Plan Year at any time before such deferrals or credits have
actually been made. The Committee also may at any time determine that a
Participant is no longer eligible to make voluntary deferrals under Section 4.

                                   SECTION 3

                        AUTOMATIC RESTORATION OPTION PLAN

3.1. AUTOMATIC ENROLLMENT. Except as provided in Section 3.3, each Participant
who participates in the UnitedHealth Group 401(k) Savings Plan (the "401(k)
Plan") and whose deferrals under the 401(k) Plan cease midyear because an IRS
Limit is reached shall automatically be enrolled in the Automatic Restoration
Option. Such Participant shall be deemed to have elected to defer pay under the
Automatic Restoration Option at the rate of deferral that is in effect under the
401(k) Plan at the time the IRS Limit is reached. Such deferrals under the
Automatic Restoration Option shall begin as soon as administratively practicable
after an IRS Limit first applies and shall continue until the following December
31. For purposes of this Section 3.1, an IRS Limit means either (a) the annual
compensation limit under section 401(a)(17) of the Code (which is $170,000 for
2000 and 2001) or any comparable successor provision, or (b) the annual deferral
limit under section 402(g) of the Code (which is $10,500 for 2000 and 2001) or
any comparable successor provision.

3.2. VOLUNTARY ENROLLMENT IF OVER 402(G) LIMIT AT HIRE. If an employee: (a) is a
member of the Executive Leadership Team ; (b) is selected for participation in
this Plan after the first day of a Plan Year; and (c) has reached the annual
deferral limit under section 402(g) of the Code under another qualified plan
before becoming a UHG employee, such employee shall be eligible to participate
in the Automatic Restoration Option and shall be eligible to elect, through a
voice response system (or other written or electronic means) approved by the
Committee, to defer between 1% and 15% of the employee's recognized compensation
(as defined under the 401(k) Plan) for the remainder of the Plan Year.

3.3. ELECTION OUT. Notwithstanding Section 3.1, eligible employees and
Participants can elect, through a voice response system (or other written or
electronic means) approved by the Committee, to waive participation in the
Automatic Restoration Option for a given Plan Year. Any such waiver shall be
made in accordance with the procedures established by the Committee from time to
time and must be received by the Committee by the December 15 preceding the
first day of such Plan Year (or such other date before the first day of such
Plan Year as the


                                      -6-

Committee may designate). A waiver of participation shall apply to such Plan
Year. A new waiver must be filed for each Plan Year.

3.4. CREDITING TO ACCOUNTS. The Committee shall cause to be credited to the
Account of each Participant the amounts, if any, of such Participant's automatic
deferrals of pay determined under Section 3.1 or Section 3.2. Such amounts shall
be credited as of the day such pay would otherwise have been paid to the
Participant.

3.5. MATCHING CREDITS. The Committee shall also cause to be credited to the
Account of each Participant an additional matching amount equal to 50% of the
amount credited to such Participant's Account under Section 3.4. For this
purpose, however, deferrals at a rate exceeding 6% of pay shall be disregarded.
Such matching amounts shall be credited as of the same day that the related
deferral of pay is credited.

                                   SECTION 4

                          INCENTIVE DEFERRAL OPTION AND
                           SALARY DEFERRAL OPTION PLAN

4.1.     INCENTIVE DEFERRAL OPTION.

         4.1.1. AMOUNT OF DEFERRALS. Through a voice response system (or other
written or electronic means) approved by the Committee, a Participant may elect
to defer between (and including) 1% and 100% of such Participant's Incentive
Award. To be effective for an Incentive Award paid during a Plan Year, the
deferral election must be received by the Committee before the December 15
preceding the first day of such Plan Year (or such other date before the first
day of such Plan Year as the Committee may designate). Such deferral election
shall be irrevocable for the Plan Year with respect to which it is made once it
has been received by the Committee.

         4.1.2. CREDITING TO ACCOUNTS. The Committee shall cause to be credited
to the Account of each Participant the amount, if any, of such Participant's
voluntary deferrals of any Incentive Awards under Section 4.1.1. Such amount
shall be credited as of the day such Incentive Award would otherwise have been
paid to the Participant.

         4.1.3. MATCHING CREDITS. The Committee shall cause to be credited to
the Account of each Participant an additional matching amount equal to 50% of
the amount credited to such Participant's Account under Section 4.1.2 above. For
this purpose, however, deferrals at a rate exceeding 6% of the Participant's
Incentive Award shall be disregarded. Such matching amounts shall be credited as
of the same day that the related deferral of the Incentive Award is credited.


                                      -7-

4.2.     SALARY DEFERRAL OPTION.

         4.2.1. AMOUNT OF DEFERRALS. Through a voice response system (or other
written or electronic means) approved by the Committee, a Participant may elect
to defer between (and including) 1% and 100% of such Participant's base salary
for a Plan Year. For this purpose, base salary shall include any non-stock
periodic incentive pay but shall not include any Incentive Awards. The Committee
may establish prospectively other limits or other pay eligible for deferral. To
be effective for a Plan Year, the deferral election must be received by the
Committee by the December 15 preceding the first day of such Plan Year (or such
other date before the first day of such Plan Year as the Committee may
designate). For a newly eligible Participant, however, the deferral election
must be received by the Committee within 30 days after the first day of such
eligibility, and, if so received, deferral shall be effective as of the first
day of the month following such receipt. Such deferral election shall be
irrevocable for the Plan Year with respect to which it is made, once it has been
received by the Committee.

         4.2.2. CREDITING TO ACCOUNTS. The Committee shall cause to be credited
to the Account of each Participant the amount, if any, of such Participant's
voluntary deferrals of salary or other pay under Section 4.2.1. Such amount
shall be credited as of the day such salary or other pay would otherwise have
been paid to the Participant.

         4.2.3. NO MATCHING CREDITS. No matching amounts shall be credited for
deferrals of salary or other pay under Section 4.2.1.

4.3.     LIMITED BONUS DEFERRAL OPTION.

         4.3.1. AMOUNT OF DEFERRALS. Through a voice response system (or other
written or electronic means) approved by the Committee, a Participant may elect
to defer between (and including) 1% and 100% of all bonuses, other than
Incentive Awards and SLTEC Bonuses, received during the Plan Year, selected by
the Committee to be eligible for deferral. Such eligible bonuses shall include
but not be limited to) ad hoc bonuses, bonuses tied to employment agreements,
bonuses under formal incentive programs (other than UHG's Leadership Results
Plan), retention bonuses, and spot bonuses. To be effective for a bonus paid
during a Plan Year, the deferral election must be received by the Committee
before the December 15 preceding the first day of such Plan Year (or such other
date as the Committee may designate). Such deferral election shall be
irrevocable for the Plan Year with respect to which it is made once it has been
received by the Committee.

         4.3.2. CREDITING TO ACCOUNTS. The Committee shall cause to be credited
to the Account of each Participant the amount, if any, of such Participant's
voluntary deferral of such bonus pay under Section 4.3.1. Such amount shall be
credited as of the day such bonus pay would otherwise have been paid to the
Participant.

         4.3.3. NO MATCHING CREDITS. No matching amounts shall be credited for
deferrals of bonus pay under Section 4.3.1.


                                      -8-

4.4.     SUPPLEMENTAL LONG TERM EXECUTIVE COMPENSATION DEFERRAL OPTION.

         4.4.1. AMOUNT OF DEFERRALS. Through a voice response system (or other
written or electronic means) approved by the Committee, a Participant may elect
to defer between (and including) 1% and 100% of such Participant's SLTEC Bonus.
To be effective for a SLTEC Bonus that becomes payable during a Plan Year, the
deferral election must be received by the Committee before the December 15
preceding the first day of such Plan Year (or such other date before the first
day of the such Plan Year as the Committee may designate). Such deferral
election shall be irrevocable for the Plan Year which respect to which it is
made once it has been received by the Committee.

         4.4.2. CREDITING TO ACCOUNTS. The Committee shall cause to be credited
to the Account of each Participant the amount, if any, of such Participant's
voluntary deferrals of any SLTEC Bonuses under Section 4.4.1. Such amount shall
be credited as soon as administratively feasible after the day such SLTEC Bonus
would otherwise have been paid to the Participant.

         4.4.3. NO MATCHING CREDITS. No matching amounts shall be credited for
deferrals of SLTEC Bonuses under Section 4.4.1.

4.5.     EMPLOYER DISCRETIONARY SUPPLEMENTS. Upon written notice to one or more
Participants and to the Committee, the CEO (or, for any Section 16 Officer, the
Board of Directors) may (but is not required to) determine that additional
amounts shall be credited to the Accounts of such Participants. Such notice
shall also specify the date of such crediting. Notwithstanding Section 7, such
notice may also establish vesting rules for such amounts, in which case separate
Accounts shall be established for such amounts for such Participants.

                                   SECTION 5

                       CREDITS FROM MEASURING INVESTMENTS

5.1.     DESIGNATION OF MEASURING INVESTMENTS. Through a voice response system
(or other written or electronic means) approved by the Committee, each
Participant shall designate the following "Measuring Investments," which shall
be used to determine the value of such Participant's Account (until changed as
provided herein):

         (a)      One or more Measuring Investments for the current Account
                  balance, and

         (b)      One or more Measuring Investments for amounts that are
                  credited to the Account in the future.

The Accounts and such Measuring Investments are specified solely as a device for
computing the amount of benefits to be paid by the Employers under the Plans,
and the Employers are not required to purchase such investments. The Measuring
Investments as of November 10, 2000


                                       -9-

are listed in Schedule II to the Plan Statement. Schedule II to the Plan
Statement may be revised and amended by the Committee, in its discretion, from
time to time.

5.2. UHG STOCK AS MEASURING INVESTMENT. The Board of Directors may (but shall
not be required to) determine that the Measuring Investments available for
election by Participants will include deemed (but not actual) investment in the
common stock of UHG, valued at the closing price of UHG common stock as reported
on the New York Stock Exchange composite tape on the applicable Valuation Date.

5.3. OPERATIONAL RULES FOR MEASURING INVESTMENTS. The Committee shall adopt
rules specifying the Measuring Investments, the circumstances under which a
particular Measuring Investment may be elected, or shall be automatically
utilized, the minimum or maximum amount or percentage of an Account which may be
allocated to a Measuring Investment, the procedures for making or changing
Measuring Investment elections, the extent (if any) to which Beneficiaries of
deceased Participants may make Measuring Investment elections and the effect of
a Participant's or Beneficiary's failure to make an effective Measuring
Investment election with respect to all or any portion of an Account.
Notwithstanding the foregoing, any rules or revision with respect to deemed
investment in the common stock of UHG elections by a Section 16 Officer shall be
made only by the Board of Directors.

                                   SECTION 6

                                OPERATIONAL RULES

6.1. OPERATIONAL RULES FOR DEFERRALS. A Participant's waiver of automatic
participation in the Automatic Restoration Option under Section 3.3 or election
to defer compensation under Section 4 shall not be "evergreen" and shall remain
in effect only for one Plan Year. If a Participant's pay after deferrals is not
sufficient to cover pre-tax and after-tax benefit payroll deductions, and tax or
other payroll withholding requirements, the Participant's deferrals shall be
reduced to the extent necessary to meet such requirements.

6.2. ESTABLISHMENT OF ACCOUNTS. There shall be established for each Participant
an unfunded, bookkeeping Account which shall be adjusted each Valuation Date.

6.3. ACCOUNTING RULES. The Committee may adopt (and revise) accounting rules for
the Accounts.


                                      -10-

                                   SECTION 7

                               VESTING OF ACCOUNTS

The Account of each Participant shall be fully (100%) vested and nonforfeitable
at all times (except for any special vesting rules that apply to employer
discretionary supplements under Section 4.5 and any early distribution penalties
that may apply under Section 9).

                                   SECTION 8

                              SPENDTHRIFT PROVISION

Participants and Beneficiaries shall have no power to transfer any interest in
an Account nor shall any Participant or Beneficiary have any power to
anticipate, alienate, dispose of, pledge or encumber the same while it is in the
possession or control of the Employers, nor shall the Committee recognize any
assignment thereof, either in whole or in part, nor shall the Account be subject
to attachment, garnishment, execution following judgment or other legal process
(including without limitation any domestic relations order, whether or not a
"qualified domestic relations order" under section 414(p) of the Code and
section 206(d) of ERISA) before the Account is distributed to the Participant or
Beneficiary.

The power to designate Beneficiaries to receive the Account of a Participant in
the event of such Participant's death shall not permit or be construed to permit
such power or right to be exercised by the Participant so as thereby to
anticipate, pledge, mortgage or encumber such Participant's Account or any part
thereof. Any attempt by a Participant to so exercise said power in violation of
this provision shall be of no force and effect and shall be disregarded by the
Committee.

                                   SECTION 9

                                  DISTRIBUTIONS

9.1.     TIME OF DISTRIBUTION TO PARTICIPANT.

         9.1.1. GENERAL RULE. A Participant's Account (reduced by the amount of
any applicable payroll, withholding and other taxes) shall be distributable upon
the Termination of Employment or Disability of the Participant. The amount of
such distribution shall be determined as of the January 31 immediately following
the Plan Year in which occurs such Termination of Employment or Disability and
shall be actually paid (or, in the case of installments, commenced) to the
Participant as soon as practicable after such determination (but not later than
the last day of the following February).


                                      -11-

         9.1.2. NO APPLICATION FOR DISTRIBUTION REQUIRED. A Participant's
Account shall be distributed automatically following the Participant's
Termination of Employment or Disability. A Participant shall not be required to
apply for distribution.

         9.1.3. CODE SECTION 162(M) DELAY. If the Committee (or, for any Section
16 Officer, the Board of Directors) determines that delaying the time that
initial payments are made or commenced would increase the probability that such
payments would be fully deductible for federal or state income tax purposes, the
Employers may unilaterally delay the time of the making or commencement of
payments for up to twenty-four (24) months after the date such payments would
otherwise be payable.

9.2. FORM OF DISTRIBUTION. As determined under the rules in Section 9.3,
distribution of the Participant's Account shall be made in one of the following
forms:

         (a)      LUMP SUM. In the form of a single lump sum.

         (b)      INSTALLMENTS. In the form of a series of 5 or 10 annual
                  installments.

                  (i)      GENERAL RULE. The amount of the first installment
                           will be determined as of the January 31 described in
                           Section 9.1 and the amount of future installments
                           will be determined as of each following January 31.
                           The amount of each installment shall be determined by
                           dividing the Account balance as of the January 31 as
                           of which the installment is being paid, by the number
                           of remaining installment payments to be made
                           (including the payment being determined). Such
                           installments shall be actually paid as soon as
                           practicable after each such determination (but not
                           later than the last day of the following February).

                  (ii)     ACCELERATED PAYMENT. A Participant who has
                           experienced a Termination of Employment or Disability
                           and for whom an installment election is in effect may
                           elect through a voice response system (or other
                           written or electronic means) approved by the
                           Committee to receive a cash lump sum payment of the
                           total remaining balance of the Account (but not part
                           thereof) for any reason; provided, however, that the
                           Account balance will be reduced by a penalty of 10%,
                           and the Participant will receive 90% of the Account
                           balance. The penalty of 10% of the Account balance
                           will be forfeited to the Employers to be used as the
                           Committee determines in its discretion. The amount of
                           such distribution will be determined as of the
                           Valuation Date coincident with or next following
                           receipt of the request by the Committee and shall be
                           actually paid to the Participant as soon as
                           practicable after such determination.


                                      -12-

         (c)      DELAYED LUMP SUM. In the form of a single lump sum following
                  the tenth (10th) anniversary of the Participant's Termination
                  of Employment or Disability.

                  (i)      GENERAL RULE. The amount of such distribution shall
                           be determined as of the January 31 immediately
                           following the calendar year in which occurs the tenth
                           (10th) anniversary of the Participant's Termination
                           of Employment or Disability. Actual distribution
                           shall be made as soon as administratively practicable
                           after such January 31.

                  (ii)     ACCELERATED PAYMENT. A Participant who has elected
                           the delayed lump sum distribution option may elect
                           through a voice response system (or other written or
                           electronic means) approved by the Committee to
                           receive a lump sum distribution of the Account before
                           the tenth (10th) anniversary of the Participant's
                           Termination of Employment or Disability; provided,
                           however, that the Account balance will be reduced by
                           a penalty of 10%, and the Participant will receive
                           90% of the Account balance. The penalty of 10% of the
                           Account balance will be forfeited to the Employers to
                           be used as the Committee determines in its
                           discretion.

                  (iii)    SPECIAL RULES FOR SLTEC PARTICIPANTS. If a
                           Participant who has elected the delayed lump sum
                           distribution option is also a participant in the
                           UnitedHealth Group Supplemental Long Term Executive
                           Compensation Plan or any comparable successor plan,
                           the Participant may, after employment has ended, make
                           a one-time election through a voice response system
                           (or other written or electronic means), approved by
                           the Committee to receive either a lump sum
                           distribution of the Account before the tenth (10th)
                           anniversary of the Participant's Termination of
                           Employment or Disability, or five (5) annual
                           installments, subject to the following rules:

                           (A)      Any election to receive a lump sum payment
                                    before the tenth (10th) anniversary of the
                                    Participant's Termination of Employment or
                                    Disability must be received by the Committee
                                    no later than the December 31 of the
                                    calendar year in which occurs the eighth
                                    (8th) anniversary of the Participant's
                                    Termination of Employment or Disability.

                           (B)      Any election to receive five (5) annual
                                    installments must be received by the
                                    Committee no later than the December 31 the
                                    calendar year in which occurs the fourth
                                    (4th)


                                      -13-

                                    anniversary of the Participant's Termination
                                    of Employment or Disability.

                           (C)      Any election to receive either a lump sum
                                    distribution of the Participant's Account
                                    before the tenth (10th) anniversary of the
                                    Participant's Termination of Employment or
                                    Disability or five (5) annual installments
                                    shall not be effective until twelve (12)
                                    months after it is received by the Committee
                                    (if the Participant dies before the end of
                                    such 12-month period, such election shall
                                    not be effective).

9.3.     ELECTION OF FORM OF DISTRIBUTION BY PARTICIPANT.

         9.3.1. ELECTION AT INITIAL ENROLLMENT. Through a voice response system
(or other written or electronic means) approved by the Committee, each
Participant shall elect at the time of initial enrollment in the Plan whether
distribution shall be made (as described in Section 9.2) in either (i) an
immediate lump sum, (ii) 5 or 10 annual installments, or (iii) a delayed lump
sum following the tenth (10th) anniversary of the Participant's Termination of
Employment or Disability.

         9.3.2. DEFAULT ELECTION OF FORM OF DISTRIBUTION. If a Participant fails
to elect a form of distribution, such Participant shall be deemed to have
elected that distribution be made in an immediate lump sum as described in
Section 9.2(a).

         9.3.3. PERIODIC RE-ELECTION. Through a voice response system (or other
written or electronic means) approved by the Committee, initial and default
distribution elections may be changed by the Participant, provided that:

         (a)      no change shall be effective until twelve (12) months after it
                  is received by the Committee (if the Participant dies before
                  the end of such 12-month period, such change shall not be
                  effective), and

         (b)      no change may be filed within twelve (12) months after the
                  initial election (or, if one or more prior changes has been
                  filed, within twelve (12) months after the latest of such
                  changes was filed).

No spouse, former spouse, Beneficiary or other person shall have any right to
participate in the Participant's decision to revise distribution elections.

9.4.     PAYMENT TO BENEFICIARY UPON DEATH OF PARTICIPANT.

         9.4.1. PAYMENT TO BENEFICIARY WHEN DEATH OCCURS BEFORE TERMINATION OF
EMPLOYMENT. If a Participant dies before Termination of Employment or
Disability, such Participant's Beneficiary will receive payment of the
Participant's Account at the same time and


                                      -14-

in the same form the Participant would have received if the Participant had
experienced a Termination of Employment on the date of death.

         9.4.2. PAYMENT TO BENEFICIARY WHEN DEATH OCCURS AFTER TERMINATION OF
EMPLOYMENT. If a Participant dies after a Termination of Employment or
Disability, the Participant's Beneficiary shall receive distribution of the
Participant's Account at the same time and in the same form the Participant
would have received if the Participant had survived.

         9.4.3. BENEFICIARY MUST APPLY FOR DISTRIBUTION. Distribution shall not
be made to any Beneficiary until such Beneficiary shall have filed a written
application for benefits in a form acceptable to the Committee and such
application shall have been approved by the Committee.

         9.4.4. ELECTION OF MEASURING INVESTMENTS BY BENEFICIARIES. A
Beneficiary of a deceased Participant shall generally have the same rights to
designate Measuring Investments for the Participant's Account that Participants
have under Section 5. The Committee may adopt (and revise) rules to govern
designations of Measuring Investments by Beneficiaries. Unless changed by the
Committee, the following rules shall apply:

         (a)      The Measuring Investments for the Account of a deceased
                  Participant shall not be changed until the Beneficiary so
                  determines.

         (b)      If a deceased Participant has more than one Beneficiary, the
                  unanimous consent of all Beneficiaries shall be required to
                  change Measuring Investments for such Participant's Account.

9.5.     DESIGNATION OF BENEFICIARIES.

         9.5.1. RIGHT TO DESIGNATE. Each Participant may designate, upon forms
to be furnished by and filed with the Committee (or through other means approved
by the Committee), one or more primary Beneficiaries or alternative
Beneficiaries to receive all or a specified part of such Participant's Account
in the event of such Participant's death. The Participant may change or revoke
any such designation from time to time without notice to or consent from any
Beneficiary. No such designation, change or revocation shall be effective unless
executed by the Participant and received by the Committee during the
Participant's lifetime.

         9.5.2. FAILURE OF DESIGNATION. If a Participant:

         (a)      fails to designate a Beneficiary,

         (b)      designates a Beneficiary and thereafter revokes such
                  designation without naming another Beneficiary, or

         (c)      designates one or more Beneficiaries and all such
                  Beneficiaries so designated fail to survive the Participant,


                                      -15-

such Participant's Account, or the part thereof as to which such Participant's
designation fails, as the case may be, shall be payable to the first class of
the following classes of automatic Beneficiaries in which a member survives the
Participant and (except in the case of surviving issue) in equal shares if there
is more than one member in such class surviving the Participant:

         (i)    Participant's surviving spouse;
         (ii)   Participant's surviving issue per stirpes and not per capita;
         (iii)  Participant's surviving parents;
         (iv)   Participant's surviving brothers and sisters; and
         (v)    Representative of Participant's estate.

         9.5.3. DISCLAIMERS BY BENEFICIARIES. A Beneficiary entitled to a
distribution of all or a portion of a deceased Participant's Account may
disclaim an interest therein subject to the following requirements. To be
eligible to disclaim, a Beneficiary must be a natural person, must not have
received a distribution of all or any portion of the Account at the time such
disclaimer is executed and delivered, and must have attained at least age
twenty-one (21) years as of the date of the Participant's death. Any disclaimer
must be in writing and must be executed personally by the Beneficiary before a
notary public. A disclaimer shall state that the Beneficiary's entire interest
in the undistributed Account is disclaimed or shall specify what portion thereof
is disclaimed. To be effective, duplicate original executed copies of the
disclaimer must be both executed and actually delivered to the Committee after
the date of the Participant's death but not later than nine (9) months after the
date of the Participant's death. A disclaimer shall be irrevocable when
delivered to the Committee. A disclaimer shall be considered to be delivered to
the Committee only when actually received by the Committee. The Committee shall
be the sole judge of the content, interpretation and validity of a purported
disclaimer. Upon the filing of a valid disclaimer, the Beneficiary shall be
considered not to have survived the Participant as to the interest disclaimed. A
disclaimer by a Beneficiary shall not be considered to be a transfer of an
interest in violation of any other provisions under this Plan. No other form of
attempted disclaimer shall be recognized by the Committee.

         9.5.4. DEFINITIONS. When used herein and, unless the Participant has
otherwise specified in the Participant's Beneficiary designation, when used in a
Beneficiary designation, "issue" means all persons who are lineal descendants of
the person whose issue are referred to, subject to the following:

         (a)      a legally adopted child and the adopted child's lineal
                  descendants always shall be lineal descendants of each
                  adoptive parent (and of each adoptive parent's lineal
                  ancestors);

         (b)      a legally adopted child and the adopted child's lineal
                  descendants never shall be lineal descendants of any former
                  parent whose parental rights were terminated by the adoption
                  (or of that former parent's lineal ancestors); except that if,
                  after a child's parent has died, the child is legally adopted
                  by a stepparent who is the spouse of the child's surviving
                  parent,


                                      -16-

                  the child and the child's lineal descendants shall remain
                  lineal descendants of the deceased parent (and the deceased
                  parent's lineal ancestors);

         (c)      if the person (or a lineal descendant of the person) whose
                  issue are referred to is the parent of a child (or is treated
                  as such under applicable law) but never received the child
                  into that parent's home and never openly held out the child as
                  that parent's child (unless doing so was precluded solely by
                  death), then neither the child nor the child's lineal
                  descendants shall be issue of the person.

"Child" means an issue of the first generation; "per stirpes" means in equal
shares among living children of the person whose issue are referred to and the
issue (taken collectively) of each deceased child of such person, with such
issue taking by right of representation of such deceased child; and "survive"
and "surviving" mean living after the death of the Participant.

         9.5.5. SPECIAL RULES. Unless the Participant has otherwise specified in
the Participant's Beneficiary designation, the following rules shall apply:

         (a)      If there is not sufficient evidence that a Beneficiary was
                  living at the time of the death of the Participant, it shall
                  be deemed that the Beneficiary was not living at the time of
                  the death of the Participant.

         (b)      The automatic Beneficiaries specified in Section 9.5.2 and the
                  Beneficiaries designated by the Participant shall become fixed
                  at the time of the Participant's death so that, if a
                  Beneficiary survives the Participant but dies before the
                  receipt of all payments due such Beneficiary hereunder, such
                  remaining payments shall be payable to the representative of
                  such Beneficiary's estate.

         (c)      If the Participant designates as a Beneficiary the person who
                  is the Participant's spouse on the date of the designation,
                  either by name or by relationship, or both, the dissolution,
                  annulment or other legal termination of the marriage between
                  the Participant and such person shall automatically revoke
                  such designation. (The foregoing shall not prevent the
                  Participant from designating a former spouse as a Beneficiary
                  on a form executed by the Participant and received by the
                  Committee after the date of the legal termination of the
                  marriage between the Participant and such former spouse, and
                  during the Participant's lifetime.)

         (d)      Any designation of a nonspouse Beneficiary by name that is
                  accompanied by a description of relationship to the
                  Participant shall be given effect without regard to whether
                  the relationship to the Participant exists either then or at
                  the Participant's death.


                                      -17-

         (e)      Any designation of a Beneficiary only by statement of
                  relationship to the Participant shall be effective only to
                  designate the person or persons standing in such relationship
                  to the Participant at the Participant's death.

The Committee shall be the sole judge of the content, interpretation and
validity of a purported Beneficiary designation.

9.6.     DEATH PRIOR TO FULL DISTRIBUTION. If, at the death of the Participant,
any payment to the Participant was due or otherwise pending but not actually
paid, the amount of such payment shall be included in the Account which is
payable to the Beneficiary (and shall not be paid to the Participant's estate).

9.7.     FACILITY OF PAYMENT. In case of minority, incapacity or legal
disability of a Participant or Beneficiary entitled to receive any distribution
under this Plan, payment shall be made, if the Committee shall be advised of the
existence of such condition:

         (a)      to the court-appointed guardian or conservator of such
                  Participant or Beneficiary, or

         (b)      if there is no court-appointed guardian or conservator, to the
                  lawfully authorized representative of the Participant or
                  Beneficiary (and the Committee, in its sole discretion, shall
                  determine whether a person is a lawfully authorized
                  representative for this purpose), or

         (c)      to an institution entrusted with the care or maintenance of
                  the incapacitated or disabled Participant or Beneficiary,
                  provided such institution has satisfied the Committee, in its
                  sole discretion, that the payment will be used for the best
                  interest and assist in the care of such Participant or
                  Beneficiary, and provided further, that no prior claim for
                  said payment has been made by a person described in (a) or (b)
                  above.

Any payment made in accordance with the foregoing provisions of this section
shall constitute a complete discharge of any liability or obligation of the
Employers therefor.

9.8.     IN-SERVICE DISTRIBUTIONS.

         9.8.1. PRE-SELECTED IN-SERVICE DISTRIBUTIONS. Each Participant has a
one-time opportunity, when initially enrolling in the Plan, to elect that
distribution be made to such Participant on one or more in-service distribution
dates prior to Termination of Employment or Disability or death under the
following rules:

         (a)      Through a voice response system (or other written or
                  electronic means) approved by the Committee, the Participant
                  may request a pre-selected in-service distribution.


                                      -18-

         (b)      No such distribution will be made before January 1 of the year
                  that follows the third full Plan Year after the Participant
                  first enrolled; provided, however, for Participants in this
                  Plan prior to January 1, 2001, no distribution shall be made
                  before January 1, 2004.

         (c)      Only one such in-service distribution will be made in any Plan
                  Year.

         (d)      Through a voice response system (or other written or
                  electronic means) approved by the Committee, the Participant
                  may request only once that any pre-selected distribution date
                  be extended. The Participant must file the extension request
                  with the Committee at least twelve (12) months before the
                  scheduled date of distribution.

         (e)      Through a voice response system (or other written or
                  electronic means) approved by the Committee, the Participant
                  may request that any pre-selected distribution date be
                  cancelled (whether or not previously extended). The
                  Participant must file the cancellation request with the
                  Committee at least twelve (12) months before the scheduled
                  date of distribution.

         (f)      The distribution amount shall be determined as of the
                  Valuation Date coincident with or next following the
                  pre-selected distribution date and shall be actually paid as
                  soon as practicable after such determination.

         (g)      If the Participant dies or experiences a Termination of
                  Employment or Disability before the scheduled pre-selected
                  in-service distribution date, no in-service distribution shall
                  be made on such date.

9.8.2.   ON DEMAND IN-SERVICE DISTRIBUTIONS.

         (a)      ELECTION. Through a voice response system (or other written or
                  electronic means) approved by the Committee, a Participant may
                  elect to receive all or a portion of such Participant's
                  Account prior to Termination of Employment or Disability for
                  any reason; provided, however, that the requested distribution
                  amount will be reduced by a penalty equal to 10% of the
                  requested amount, and the Participant will receive 90% of the
                  requested amount. The penalty of 10% of the requested amount
                  will be forfeited to the Employers to be used as the Committee
                  determines in its discretion.

         (b)      DISTRIBUTION AMOUNT. The amount of such distribution shall be
                  determined as of the Valuation Date coincident with or next
                  following receipt of the request by the Committee and shall be
                  actually paid to the Participant as soon as practicable after
                  such determination.


                                      -19-

         (c)      SUSPENSION RULE. If a Participant receives such a
                  distribution, the Participant's deferrals under Sections 3 and
                  4 will cease as soon as administratively practicable following
                  the date such distribution is made. The Participant may not
                  again elect to defer compensation under this Plan until the
                  enrollment period for the Plan Year that begins at least six
                  (6) months after such distribution.

         9.8.3.   IN-SERVICE DISTRIBUTION FOR FINANCIAL HARDSHIP.

         (a)      ELECTION. A Participant may elect in writing to receive all or
                  part of the Participant's Account prior to Termination of
                  Employment or Disability to alleviate a Financial Hardship. A
                  Beneficiary of a deceased Participant may also request an
                  early distribution for Financial Hardship.

         (b)      FINANCIAL HARDSHIP DEFINED. For purposes of this Plan,
                  "Financial Hardship" means a severe financial hardship to the
                  Participant resulting from a sudden and unexpected illness or
                  accident of the Participant or a dependent (as defined in
                  section 152(a) of the Code), loss of the Participant's
                  property due to casualty, or other similar extraordinary and
                  unforeseeable emergency circumstances arising as a result of
                  events beyond the control of the Participant. If a hardship is
                  or may be relieved either (i) through reimbursement or
                  compensation by insurance or otherwise, (ii) by liquidation of
                  the Participant's assets (to the extent the liquidation of
                  such assets would not itself cause severe financial hardship),
                  or (iii) by cessation of deferrals under this Plan or any
                  401(k) plan, then the hardship shall not constitute a
                  Financial Hardship for purposes of this Plan. If a Beneficiary
                  of a deceased Participant requests an early distribution for
                  Financial Hardship, then the references in this definition to
                  "Participant" shall be deemed to be references to such
                  Beneficiary.

         (c)      DISTRIBUTION AMOUNT. The amount of such distribution shall be
                  determined as of the Valuation Date next preceding approval of
                  the request by the Committee and shall be actually paid as
                  soon as practicable after such approval.

         (d)      SUSPENSION RULE. If a Participant receives a distribution due
                  to Financial Hardship, the Participant's deferrals under
                  Sections 3 and 4 will cease as soon as administratively
                  practicable following the date such distribution is made. The
                  Participant may not again elect to defer compensation under
                  this Plan until the enrollment period for the Plan Year that
                  begins at least six (6) months after such distribution.

9.9.     DISTRIBUTIONS IN CASH. All distributions from this Plan shall be made
in cash.


                                      -20-

                                   SECTION 10

                                 FUNDING OF PLAN

10.1.    UNFUNDED PLAN. The obligation of any Employer to make payments under
the Plans constitutes only the unsecured (but legally enforceable) promises of
that Employer to make such payments. No Participant shall have any lien, prior
claim or other security interest in any property of any Employer. The Employers
shall have no obligation to establish or maintain any fund, trust or account
(other than a bookkeeping account) for the purpose of funding or paying the
benefits promised under the Plans. If such a fund, trust or account is
established, the property therein that is allocable to a particular Employer
shall remain the sole and exclusive property of that Employer. The Employers
shall be obligated to pay the cost of the Plans out of their general assets. All
references to accounts, accruals, gains, losses, income, expenses, payments,
custodial funds and the like are included merely for the purpose of measuring
the obligation of the Employers to Participants in the Plans and shall not be
construed to impose on the Employers the obligation to create any separate fund
for purposes of the Plans.

10.2.    CORPORATE OBLIGATION. Neither any officer of any Employer nor any
member of the Committee in any way secures or guarantees the payment of any
benefit or amount which may become due and payable hereunder to or with respect
to any Participant. Each Participant and other person entitled at any time to
payments hereunder shall look solely to the assets of such Participant's
Employer for such payments as an unsecured, general creditor. After benefits
have been paid to or with respect to a Participant and such payment purports to
cover in full the benefit hereunder, such former Participant or other person or
persons, as the case may be, shall have no further right or interest in any
other Plan assets. No person shall be under any liability or responsibility for
failure to effect any of the objectives or purposes of the Plans by reason of
the insolvency of any of the Employers.

                                   SECTION 11

                            AMENDMENT AND TERMINATION

11.1.    AMENDMENT AND TERMINATION. The Committee may unilaterally amend the
Plan Statement prospectively, retroactively or both, at any time and for any
reason deemed sufficient by it without notice to any person affected by this
Plan and the Board of Directors may terminate this Plan both with regard to
persons receiving benefits and persons expecting to receive benefits in the
future; provided, however, that:

         (a)      NO REDUCTION OR DELAY. The benefit, if any, payable to or with
                  respect to a Participant, whether or not the Participant has
                  had a Termination of Employment or Disability as of the
                  effective date of such amendment, shall not be, without the
                  written consent of the Participant, diminished or delayed by
                  such amendment.


                                      -21-

         (b)      CASH LUMP SUM PAYMENT. If the Board of Directors terminates
                  the Plan completely, all Accounts under the Plan shall be
                  automatically and immediately distributed in single lump sum
                  payments.

11.2. SPECIAL RULE FOR SECTION 16 OFFICERS. Notwithstanding anything in this
Plan Statement to the contrary, the Committee may adopt rules to facilitate
compliance with the rules and requirements of the Securities and Exchange
Commission, including Section 16 of the Securities and Exchange Act of 1934, as
amended, which rules may limit rights under this Plan for Section 16 Officers.

11.3. NO ORAL AMENDMENTS. No modification of the terms of the Plan Statement or
termination of this Plan shall be effective unless it is in writing and signed
on behalf of the Board of Directors by a person authorized to execute such
writing. No oral representation concerning the interpretation or effect of the
Plan Statement shall be effective to amend the Plan Statement.

11.4. PLAN BINDING ON SUCCESSORS. UHG shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise of all or
substantially all of the business and/or assets of UHG), by agreement, to
expressly assume and agree to perform this Plan Statement in the same manner and
to the same extent that UHG would be required to perform it if no such
succession had taken place.


                                   SECTION 12

                     DETERMINATIONS -- RULES AND REGULATIONS

12.1. DETERMINATIONS. The Committee shall make such determinations as may be
required from time to time in the administration of the Plans. The Committee
shall have the discretionary authority and responsibility to interpret and
construe the Plan Statement and to determine all factual and legal questions
under the Plans, including but not limited to the entitlement of Participants
and Beneficiaries, and the amounts of their respective interests. Each
interested party may act and rely upon all information reported to them
hereunder and need not inquire into the accuracy thereof, nor be charged with
any notice to the contrary.

12.2. RULES AND REGULATIONS. Any rule not in conflict or at variance with the
provisions hereof may be adopted by the Committee.

12.3. METHOD OF EXECUTING INSTRUMENTS. Information to be supplied or written
notices to be made or consents to be given by the Committee pursuant to any
provision of the Plan Statement may be signed in the name of the Committee by
any officer who has been authorized to make such certification or to give such
notices or consents.

12.4. CLAIMS PROCEDURE. The claims procedure set forth in this Section 12.4
shall be the exclusive administrative procedure for the disposition of claims
for benefits arising under the Plans.


                                      -22-

12.4.1. ORIGINAL CLAIM. Any person may, if he or she so desires, file with the
Committee a written claim for benefits under the Plans. Within ninety (90) days
after the filing of such a claim, the Committee shall notify the claimant in
writing whether the claim is upheld or denied in whole or in part or shall
furnish the claimant a written notice describing specific special circumstances
requiring a specified amount of additional time (but not more than one hundred
eighty (180) days from the date the claim was filed) to reach a decision on the
claim. If the claim is denied in whole or in part, the Committee shall state in
writing:

         (a)      the specific reasons for the denial;

         (b)      the specific references to the pertinent provisions of the
                  Plan Statement on which the denial is based;

         (c)      a description of any additional material or information
                  necessary for the claimant to perfect the claim and an
                  explanation of why such material or information is necessary;
                  and

         (d)      an explanation of the claims review procedure set forth in
                  this section.

12.4.2. REVIEW OF DENIED CLAIM. Within sixty (60) days after receipt of notice
that the claim has been denied in whole or in part, the claimant may file with
the Compensation and Human Resources Committee of the Board of Directors (the
"Comp Committee") a written request for a review and may, in conjunction
therewith, submit written issues and comments. Within sixty (60) days after the
filing of such a request for review, the Comp Committee shall notify the
claimant in writing whether, upon review, the claim was upheld or denied in
whole or in part or shall furnish the claimant a written notice describing
specific special circumstances requiring a specified amount of additional time
(but not more than one hundred twenty (120) days from the date the request for
review was filed) to reach a decision on the request for review. If the claimant
wishes to seek further review of the Comp Committee's decision upon review, the
claimant shall submit the claim (or dispute or complaint) to binding arbitration
pursuant to the rules of the American Arbitration Association. This is the only
right a complainant has for further consideration. The matter must be submitted
to binding arbitration within one (1) year of receipt of notice of the Comp
Committee's final decision upon review. The arbitrators shall have no power to
award any punitive or exemplary damages or to vary or ignore the provisions of
the Plan Statement and shall be bound by controlling law.

12.4.3.  GENERAL RULES.

         (a)      No inquiry or question shall be deemed to be a claim or a
                  request for a review of a denied claim unless made in
                  accordance with the claims procedure. The Committee may
                  require that any claim for benefits and any request for a
                  review of a denied claim be filed on forms to be furnished by
                  the Committee upon request.


                                      -23-

         (b)      All decisions on original claims shall be made by the
                  Committee and all decisions on requests for a review of denied
                  claims shall be made by the Comp Committee.

         (c)      The Committee or the Comp Committee may, in their discretion,
                  hold one or more hearings on a claim or a request for a review
                  of a denied claim.

         (d)      A claimant may be represented by a lawyer or other
                  representative (at the claimant's own expense), but the
                  Committee and the Comp Committee reserve the right to require
                  the claimant to furnish written authorization. A claimant's
                  representative shall be entitled, upon request, to copies of
                  all notices given to the claimant.

         (e)      The decision of the Committee on a claim and a decision of the
                  Comp Committee on a request for a review of a denied claim
                  shall be served on the claimant in writing. If a decision or
                  notice is not received by a claimant within the time
                  specified, the claim or request for a review of a denied claim
                  shall be deemed to have been denied.

         (f)      Prior to filing a claim or a request for a review of a denied
                  claim, the claimant or his or her representative shall have a
                  reasonable opportunity to review a copy of the Plan Statement
                  and all other pertinent documents in the possession of the
                  Committee and the Comp Committee.

         (g)      The Committee and the Comp Committee may permanently or
                  temporarily delegate its responsibilities under this claims
                  procedure to an individual or a committee of individuals.

12.5.    LIMITATIONS AND EXHAUSTION.

         12.5.1. LIMITATIONS. No claim shall be considered under these
administrative procedures unless it is filed with the Committee within one (1)
year after the claimant knew (or reasonably should have known) of the principal
facts on which the claim is based. Every untimely claim shall be denied by the
Committee without regard to the merits of the claim. No legal action (whether
arising under section 502 or section 510 of ERISA or under any other statute or
non-statutory law) may be brought by any claimant on any matter pertaining to
the Plans unless the legal action is commenced in the proper forum before the
earlier of:

         (a)      two (2) years after the claimant knew (or reasonably should
                  have known) of the principal facts on which the claim is
                  based, or

         (b)      ninety (90) days after the claimant has exhausted these
                  administrative procedures.

Knowledge of all facts that a Participant knew (or reasonably should have known)
shall be imputed to each claimant who is or claims to be a Beneficiary of the
Participant (or otherwise


                                      -24-

claims to derive an entitlement by reference to a Participant) for the purpose
of applying the one (1) year and two (2) year periods.

12.5.2. EXHAUSTION REQUIRED. The exhaustion of these administrative procedures
is mandatory for resolving every claim and dispute arising under the Plans. As
to such claims and disputes:

         (a)      no claimant shall be permitted to commence any legal action
                  relating to any such claim or dispute (whether arising under
                  section 502 or section 510 of ERISA or under any other statute
                  or non-statutory law) unless a timely claim has been filed
                  under these administrative procedures and these administrative
                  procedures have been exhausted; and

         (b)      in any such legal action all explicit and implicit
                  determinations by the Committee and the Comp Committee
                  (including, but not limited to, determinations as to whether
                  the claim was timely filed) shall be afforded the maximum
                  deference permitted by law.

                                   SECTION 13

                               PLAN ADMINISTRATION

13.1. OFFICERS. Except as hereinafter provided, functions generally assigned to
UHG shall be discharged by its officers or delegated and allocated as provided
herein.

13.2. CHIEF EXECUTIVE OFFICER. Except as hereinafter provided, the CEO may
delegate or redelegate and allocate and reallocate to one or more persons or to
a committee of persons jointly or severally, and whether or not such persons are
directors, officers or employees, such functions assigned to UHG generally
hereunder as the CEO may from time to time deem advisable.

13.3. BOARD OF DIRECTORS. Notwithstanding the foregoing, the Board of Directors
shall have the authority to terminate the Plans and the exclusive authority to
determine eligibility of Section 16 Officers to participate in this Plan under
Section 2.

13.4. COMMITTEE. The Committee shall:

         (a)      keep a record of all its proceedings and acts and keep all
                  books of account, records and other data as may be necessary
                  for the proper administration of the Plans; notify the
                  Employers of any action taken by the Committee and, when
                  required, notify any other interested person or persons;

         (b)      determine from the records of the Employers the compensation,
                  status and other facts regarding Participants and other
                  employees;


                                      -25-

         (c)      prescribe forms to be used for distributions, notifications,
                  etc., as may be required in the administration of the Plans;

         (d)      set up such rules, applicable to all Participants similarly
                  situated, as are deemed necessary to carry out the terms of
                  this Plan Statement;

         (e)      perform all other acts reasonably necessary for administering
                  the Plans and carrying out the provisions of this Plan
                  Statement and performing the duties imposed on it by the Board
                  of Directors;

         (f)      resolve all questions of administration of the Plans not
                  specifically referred to in this section;

         (g)      in accordance with regulations of the Secretary of Labor,
                  provide adequate notice in writing to any claimant whose claim
                  for benefits under the Plans has been denied, setting forth
                  the specific reasons for such denial, written in a manner
                  calculated to be understood by the claimant; and

         (h)      delegate or redelegate to one or more persons, jointly or
                  severally, and whether or not such persons are members of the
                  Committee or employees of the Employers, such functions
                  assigned to the Committee hereunder as it may from time to
                  time deem advisable.

If there shall at any time be three (3) or more members of the Committee serving
hereunder who are qualified to perform a particular act, the same may be
performed, on behalf of all, by a majority of those qualified, with or without
the concurrence of the minority. No person who failed to join or concur in such
act shall be held liable for the consequences thereof, except to the extent that
liability is imposed under ERISA.

13.5. DELEGATION. The Board of Directors and the members of the Committee shall
not be liable for an act or omission of another person with regard to a
responsibility that has been allocated to or delegated to such other person
pursuant to the terms of the Plan Statement or pursuant to procedures set forth
in the Plan Statement.

13.6. CONFLICT OF INTEREST. If any individual to whom authority has been
delegated or redelegated hereunder shall also be a Participant in either Plan,
such Participant shall have no authority with respect to any matter specially
affecting such Participant's individual rights hereunder or the interest of a
person superior to him or her in the organization (as distinguished from the
rights of all Participants and Beneficiaries or a broad class of Participants
and Beneficiaries), all such authority being reserved exclusively to other
individuals as the case may be, to the exclusion of such Participant, and such
Participant shall act only in such Participant's individual capacity in
connection with any such matter.

13.7. ADMINISTRATOR. UHG shall be the administrator for purposes of section
3(16)(A) of ERISA.


                                      -26-

13.8. SERVICE OF PROCESS. In the absence of any designation to the contrary by
the Committee, the General Counsel of UHG is designated as the appropriate and
exclusive agent for the receipt of process directed to the Plans in any legal
proceeding, including arbitration, involving the Plans.

13.9. EXPENSES. All expenses of administering this Plan prior to November 1,
2000 shall be borne by the Employers. Effective November 1, 2000, the expenses
of administering the Plans shall be payable out of the trust fund established
for the Plans except to the extent that the Employers, in their discretion,
directly pay the expenses.

13.10. TAX WITHHOLDING. The Employer (or its delegee) shall withhold the amount
of any federal, state or local income tax or other tax required to be withheld
by the Employer under applicable law with respect to any amount payable under
the Plans.

13.11. CERTIFICATIONS. Information to be supplied or written notices to be made
or consents to be given by the Committee pursuant to any provision of this Plan
Statement may be signed in the name of the Committee by any officer who has been
authorized to make such certification or to give such notices or consents.

13.12. ERRORS IN COMPUTATIONS. Neither UHG or the Employer shall be liable or
responsible for any error in the computation of the Account or the determination
of any benefit payable to or with respect to any Participant resulting from any
misstatement of fact made by the Participant or by or on behalf of any survivor
to whom such benefit shall be payable, directly or indirectly, to the Employer
and used by the Committee in determining the benefit. The Committee shall not be
obligated or required to increase the benefit payable to or with respect to such
Participant which, on discovery of the misstatement, is found to be understated
as a result of such misstatement of the Participant. However, the benefit of any
Participant which is overstated by reason of any such misstatement or any other
reason shall be reduced to the amount appropriate in view of the truth (and to
recover any prior overpayment).

                                   SECTION 14

                                  CONSTRUCTION

14.1. APPLICABLE LAWS.

         14.1.1. SEPARATE PLANS. For purposes of state taxation of benefits
under the Plans, the Plans are two separate plans: (1) the Automatic Restoration
Option Plan, and (2) the Incentive Deferral, Salary Deferral, and Limited Bonus
Deferral Option Plan. The purpose of the Plans is to provide retirement income
to Participants.

         14.1.2. ERISA STATUS. The Plans are maintained with the understanding
that the Plans are unfunded plans maintained primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees as provided


                                      -27-

in section 201(2), section 301(3) and section 401(a)(1) of ERISA. Each provision
shall be interpreted and administered accordingly. If any individually
contracted supplemental retirement arrangement with any Section 16 Officer is
deemed to be covered by ERISA, such arrangement shall be included in the
Incentive Deferral Option and Salary Deferral Option Plan but only to the extent
that such inclusion is necessary to comply with ERISA.

         14.1.3. IRC STATUS. The Plans are intended to be a nonqualified
deferred compensation arrangement. The rules of section 401(a) et. seq. of the
Code shall not apply to the Plans. The rules of section 3121(v) and section
3306(r)(2) of the Code shall apply to the Plans.

         14.1.4. SECURITIES LAWS COMPLIANCE. If any security of UHG is offered
as a Measuring Investment under the Plans, then decisions assigned in this Plan
Statement to the Committee shall instead by made by the Board of Directors to
the extent any such decision could affect the interest of any Section 16 Officer
in securities of United, including without limitation any change in Valuation
Dates.

         14.1.5. REFERENCES TO LAWS. Any reference in the Plan Statement to a
statute or regulation shall be considered also to mean and refer to any
subsequent amendment or replacement of that statute or regulation.

14.2. EFFECT ON OTHER PLANS. This Plan Statement shall not alter, enlarge or
diminish any person's employment rights or obligations or rights or obligations
under any other employee pension benefit or employee welfare benefit plan.

14.3.    DISQUALIFICATION. Notwithstanding any other provision of the Plan
Statement or any election or designation made under the Plans, any potential
Beneficiary who feloniously and intentionally kills a Participant shall be
deemed for all purposes of the Plans and all elections and designations made
under the Plans to have died before such Participant. A final judgment of
conviction of felonious and intentional killing is conclusive for this purpose.
In the absence of a conviction of felonious and intentional killing, the
Committee shall determine whether the killing was felonious and intentional for
this purpose.

14.4.    RULES OF DOCUMENT CONSTRUCTION.

         (a)      Whenever appropriate, words used herein in the singular may be
                  read in the plural, or words used herein in the plural may be
                  read in the singular; the masculine may include the feminine;
                  and the words "hereof," "herein" or "hereunder" or other
                  similar compounds of the word "here" shall mean and refer to
                  the entire Plan Statement and not to any particular paragraph
                  or Section of the Plan Statement unless the context clearly
                  indicates to the contrary.

         (b)      The titles given to the various Sections of the Plan Statement
                  are inserted for convenience of reference only and are not
                  part of the Plan Statement, and they shall not be considered
                  in determining the purpose, meaning or intent of any provision
                  hereof.


                                      -28-

         (c)      Notwithstanding any thing apparently to the contrary contained
                  in the Plan Statement, the Plan Statement shall be construed
                  and administered to prevent the duplication of benefits
                  provided under the Plans and any other qualified or
                  nonqualified plan maintained in whole or in part by the
                  Employers.

14.5. CHOICE OF LAW. This instrument has been executed and delivered in the
State of Minnesota and has been drawn in conformity to the laws of that State
and shall, except to the extent that federal law is controlling, be construed
and enforced in accordance with the laws of the State of Minnesota.

14.6. NO EMPLOYMENT CONTRACT. This Plan Statement is not and shall not be deemed
to constitute a contract of employment between the Employer and any person, nor
shall anything herein contained be deemed to give any person any right to be
retained in the employ of the Employer or in any way limit or restrict any such
Employer's right or power to discharge any person at any time and to treat any
person without regard to the effect which such treatment might have upon him or
her as a Participant in the Plans. Neither the terms of the Plan Statement nor
the benefits under the Plans nor the continuance of the Plans shall be a term of
the employment of any employee. The Employer shall not be obliged to continue
the Plans.

Dated:  ____________________, 200__.      UNITEDHEALTH GROUP
                                                INCORPORATED


                                          By:___________________________________
                                              L. Robert Dapper
                                              Senior Vice President of
                                              Human Capital and
                                              Chairman of the Employee
                                              Benefits Committee


                                      -29-

                                   SCHEDULE I

                             EMPLOYERS PARTICIPATING
                                     IN THE
                   UNITEDHEALTH GROUP EXECUTIVE SAVINGS PLANS


1.       United HealthCare Services, Inc.

2.       United HealthCare of California, Inc.

3.       U.S. Behavioral Health Plan, California

4.       UHC International Services, Inc.

5.       United HealthCare of Illinois, Inc. (prior to January 1, 2001)

6.       United Healthcare International, Inc. (formerly known as United
         HealthCare Global Consulting, Inc.)

7.       UnitedHealth Group Finance Company, Inc. (effective as of January 1,
         2000)

8.       UnitedHealthcare of Minnesota, Inc. (effective as of January 1, 2001)


                                      SI-1

                                   SCHEDULE II

                              MEASURING INVESTMENTS


A.       MEASURING INVESTMENTS AS OF NOVEMBER 10, 2000. The following are the
Measuring Investments as of November 10, 2000:

1.       One-Choice Conservative -- American Century Strategic Allocation:
         Conservative Fund

2.       One-Choice Moderate -- American Century Strategic Allocation: Moderate
         Fund

3.       One-Choice Aggressive -- American Century Strategic Allocation:
         Aggressive Fund

4.       Bond Index -- Vanguard Total Bond Market Index Fund

5.       S & P 500 Index -- First American Index Fund

6.       Wilshire 4500 Index -- Vanguard Extended Market Index Fund

7.       Money Market -- First American Prime Obligations Fund

8.       Stable Value -- Wells Fargo Stable Income Fund

9.       Bond -- Loomis Sayles Bond Fund

10.      Large-Cap -- Dodge & Cox Stock Fund

11.      Large-Cap Growth -- Alliance Premier Growth Fund

12.      Mid-Cap Value -- Sound Share Fund

13.      Mid-Cap Growth -- Wanburg Pincus Emerging Growth Fund

14.      International Value -- Templeton Foreign Fund

15.      International Growth -- American Century International Growth Fund

16.      Small-Cap Value -- Loomis Sayles Small-Cap Value Fund

17.      Small-Cap Growth -- Loomis Sayles Small-Cap Growth Fund

18.      Mid-Cap Growth -- PBHG Growth Fund


                                     SII-1

B.       DEFAULT RULES. If a Participant does not designate which Measuring
Investments shall be used to determine the value of the Participant's Account,
the value of the Participant's Account will be determined using the following
Measuring Investments:

         (i)      ON OR AFTER NOVEMBER 10, 2000. For all amounts credited to the
                  Participant's Account on or after November 10, 2000, the
                  default Measuring Investment shall be the American Century
                  Strategic Allocation Conservative Fund.

         (ii)     PRIOR TO NOVEMBER 10, 2000. For all amounts credited to the
                  Participant's Account prior to November 10, 2000, the default
                  Measuring Investment shall be the First American Prime
                  Obligations Fund.



                                     SII-2

EX-10.(G)

                                                                   Exhibit 10(g)







                               UNITEDHEALTH GROUP
                      DIRECTORS' COMPENSATION DEFERRAL PLAN
                                (2002 STATEMENT)







                               UNITEDHEALTH GROUP
                      DIRECTORS' COMPENSATION DEFERRAL PLAN
                                (2002 STATEMENT)

                                TABLE OF CONTENTS



                                                                                                               PAGE
                                                                                                               ----
                                                                                                            
SECTION 1.            INTRODUCTION AND DEFINITIONS................................................................1

                      1.1.     Establishment of Plan
                      1.2.     Definitions
                               1.2.1.       Account
                               1.2.2.       Annual Valuation Date
                               1.2.3.       Beneficiary
                               1.2.4.       Board Compensation
                               1.2.5.       Board of Directors or Board
                               1.2.6.       Code
                               1.2.7.       Committee
                               1.2.8.       Effective Date
                               1.2.9.       Participant
                               1.2.10.      Plan
                               1.2.11.      Plan Statement
                               1.2.12.      Plan Year
                               1.2.13.      Termination of Directorship
                               1.2.14.      UnitedHealth Group or UHG
                               1.2.15.      Valuation Date

SECTION 2.            ELIGIBILITY TO PARTICIPATE..................................................................2


SECTION 3.            COMPENSATION DEFERRAL OPTION................................................................3

                      3.1.     Option to Defer Board Compensation
                               3.1.1.       Amount of Deferrals
                               3.1.2.       Crediting to Accounts
                               3.1.3.       No Matching Credits
                      3.2.     Discretionary Supplements from UnitedHealth Group
                      3.3.     Credits Limited to Outside Directors

SECTION 4.            CREDITS FROM MEASURING INVESTMENTS..........................................................4

                      4.1.     Designation of Measuring Investments
                      4.2.     UnitedHealth Group Stock as Measuring Investment




                                      -i-


                                                                                                            
                      4.3.     Operational Rules for Measuring Investments
                      4.4.     Measuring Investments and Rules to be Identical to Executive Savings Plan

SECTION 5.            OPERATIONAL RULES...........................................................................5

                      5.1.     Operational Rules for Deferrals
                      5.2.     Establishment of Accounts
                      5.3.     Accounting Rules

SECTION 6.            VESTING OF ACCOUNTS.........................................................................5


SECTION 7.            SPENDTHRIFT PROVISION.......................................................................5


SECTION 8.            DISTRIBUTIONS...............................................................................6

                      8.1.     Time of Distribution to Participant
                               8.1.1.       General Rule
                               8.1.2.       No Application for Distribution Required
                      8.2.     Form of Distribution
                      8.3.     Election of Form of Distribution by Participant
                               8.3.1.       Election at Initial Enrollment
                               8.3.2.       Default Election of Form of Distribution
                               8.3.3.       Periodic Re-Election
                      8.4. Payment to Beneficiary Upon Death of Participant
                               8.4.1.       Payment to Beneficiary When Death Occurs Before Termination of
                                            Directorship
                               8.4.2.       Payment to Beneficiary When Death Occurs After Termination of
                                            Directorship
                               8.4.3.       Beneficiary Must Apply for Distribution
                               8.4.4.       Election of Measuring Investments by Beneficiaries
                      8.5.      Designation of Beneficiaries
                               8.5.1.       Right to Designate
                               8.5.2.       Failure of Designation
                               8.5.3.       Disclaimers by Beneficiaries
                               8.5.4.       Definitions
                               8.5.5.       Special Rules
                      8.6.     Death Prior to Full Distribution
                      8.7.     Facility of Payment
                      8.8.     In-Service Distributions
                               8.8.1.       Pre-Selected In-Service Distributions
                               8.8.2.       On Demand In-Service Distributions
                               8.8.3.       In-Service Distribution for Financial Hardship
                      8.9.     Distributions in Cash





                                      -ii-



                                                                                                            
SECTION 9.            FUNDING OF PLAN............................................................................15

                      9.1.     Unfunded Plan
                      9.2.     Corporate Obligation

SECTION 10.           AMENDMENT AND TERMINATION..................................................................15

                      10.1.    Amendment and Termination
                      10.2.    No Oral Amendments
                      10.3.    Plan Binding on Successors

SECTION 11.           DETERMINATIONS-- RULES AND REGULATIONS.....................................................16

                      11.1.    Determinations
                      11.2.    Rules and Regulations
                      11.3.    Method of Executing Instruments
                      11.4.    Claims Procedure
                               11.4.1.      Original Claim
                               11.4.2.      Review of Denied Claim
                               11.4.3.      General Rules
                      11.5.    Limitations and Exhaustion
                               11.5.1.      Limitations
                               11.5.2.      Exhaustion Required

SECTION 12.           PLAN ADMINISTRATION........................................................................19

                      12.1.    Officers
                      12.2.    Chief Executive Officer
                      12.3.    Board of Directors
                      12.4.    Committee
                      12.5.    Delegation
                      12.6.    Conflict of Interest
                      12.7.    Service of Process
                      12.8.    Expenses
                      12.9.    Certifications
                      12.10.   Errors in Computations

SECTION 13.           CONSTRUCTION...............................................................................21

                      13.1.    Applicable Laws
                               13.1.1.      ERISA Status
                               13.1.2.      IRC Status
                               13.1.3.      References to Laws
                      13.2.    Effect on Other Plans
                      13.3.    Disqualification





                                     -iii-


                                                                                                            

                      13.4.    Rules of Document Construction
                      13.5.    Choice of Law

SCHEDULE I -          MEASURING INVESTMENTS....................................................................SI-1





                                      -iv-





                               UNITEDHEALTH GROUP
                      DIRECTORS' COMPENSATION DEFERRAL PLAN
                                (2002 STATEMENT)



                                    SECTION 1

                          INTRODUCTION AND DEFINITIONS

1.1. ESTABLISHMENT OF PLAN. Effective January 1, 2002, UNITEDHEALTH GROUP
INCORPORATED, a Minnesota corporation (hereinafter sometimes referred to as
"UnitedHealth Group"), as plan sponsor, hereby establishes a nonqualified,
unfunded, deferred compensation plan for the benefit of certain members of its
Board of Directors.

1.2. DEFINITIONS. When the following terms are used herein with initial capital
letters, they shall have the following meanings:

            1.2.1. ACCOUNT -- the separate bookkeeping account established for
each Participant which represents the separate unfunded and unsecured general
obligation of UnitedHealth Group established with respect to each person who is
a Participant in this Plan in accordance with Section 2 and to which are
credited the dollar amounts specified in Sections 3 and 4 and from which are
subtracted payments made pursuant to Section 8.

            1.2.2. ANNUAL VALUATION DATE -- each December 31.

            1.2.3. BENEFICIARY -- a person designated by a Participant (or
automatically by operation of the Plan Statement) to receive all or a part of
the Participant's Account in the event of the Participant's death prior to full
distribution thereof. A person so designated shall not be considered a
Beneficiary until the death of the Participant.

            1.2.4. BOARD COMPENSATION -- Board retainer fees, Board meeting fees
and Board committee fees but not stock options or other stock-based
compensation. The Committee may designate prospectively that other pay is
included in Board Compensation.

            1.2.5. BOARD OF DIRECTORS or BOARD -- the Board of Directors of
UnitedHealth Group or its successor, and any properly authorized committee of
the Board of Directors.

            1.2.6. CODE -- the Internal Revenue Code of 1986, as amended.

            1.2.7. COMMITTEE -- the Compensation and Human Resources Committee
of the Board of Directors (also known as the "Compensation Committee").

            1.2.8. EFFECTIVE DATE -- January 1, 2002.




            1.2.9. PARTICIPANT -- a member of the Board of Directors of
UnitedHealth Group who has elected to defer compensation under Section 3. A
director who has become a Participant shall continue to be a Participant in this
Plan until the date of the Participant's death or, if earlier, the date when the
Participant has received a distribution of the Participant's entire Account.

            1.2.10. PLAN -- the nonqualified, unfunded, deferred compensation
program maintained by UnitedHealth Group for the benefit of Participants
eligible to participate therein, as set forth in this Plan Statement. (As used
herein, "Plan" does not refer to the document pursuant to which the Plan is
maintained. That document is referred to herein as the "Plan Statement".) The
Plan shall be referred to as the "UnitedHealth Group Directors' Compensation
Deferral Plan."

            1.2.11. PLAN STATEMENT -- this document entitled "UnitedHealth Group
Directors' Compensation Deferral Plan (2002 Statement)" as adopted by the Board
of Directors and generally effective as of January 1, 2002, as the same may be
amended from time to time thereafter.

            1.2.12. PLAN YEAR -- the twelve (12) consecutive month period ending
on any Annual Valuation Date.

            1.2.13. TERMINATION OF DIRECTORSHIP -- a complete severance of a
Participant's membership on the Board of Directors of UnitedHealth Group for any
reason other than the Participant's death.

            1.2.14. UNITEDHEALTH GROUP OR UHG -- UNITEDHEALTH GROUP
INCORPORATED, a Minnesota corporation, or any successor thereto.

            1.2.15. VALUATION DATE -- any day that the U.S. securities markets
are open and conducting business.

                                    SECTION 2

                           ELIGIBILITY TO PARTICIPATE

Each member of the Board of Directors of UnitedHealth Group as of the initial
adoption of this Plan who is not an employee of UnitedHealth Group or any
affiliate shall be eligible to become a Participant in this Plan as of January
1, 2002. Each person who later becomes a member of the Board and is not then an
employee of UnitedHealth Group or any affiliate shall be eligible to become a
Participant in this Plan as of such member's election to the Board. Each person
(a) who is both a member of the Board and an employee of UnitedHealth Group or
any affiliate, and (b) who later ceases to be so employed but continues as a
member of the Board, shall be eligible to become a Participant in this Plan as
of such cessation of employment.



                                      -2-


                                    SECTION 3

                          COMPENSATION DEFERRAL OPTION

3.1. OPTION TO DEFER BOARD COMPENSATION.

            3.1.1. AMOUNT OF DEFERRALS. Through a voice response system (or
other written or electronic means) approved by the Committee, a Participant may
elect to defer between (and including) 1% and 100% of such Participant's Board
Compensation for Board services for a Plan Year. The Committee may establish
prospectively other percentage limits. To be effective for a Plan Year, the
deferral election must be received by the Committee by the December 15 preceding
the first day of such Plan Year (or such other date before the first day of such
Plan Year as the Committee may designate). For a newly eligible Participant,
however, the deferral election must be received by the Committee within 30 days
after the first day of such eligibility, and, if so received, deferral shall be
effective as of the first day of the month following such receipt with respect
to the remainder of the Plan Year. Such deferral election shall be irrevocable
for the Plan Year with respect to which it is made, once it has been received by
the Committee.

            3.1.2. CREDITING TO ACCOUNTS. The Committee shall cause to be
credited to the Account of each Participant the amount, if any, of such
Participant's voluntary deferrals of Board Compensation under Section 3.1.1.
Such amount shall be credited as soon as administratively feasible following the
time such Board Compensation would otherwise have been paid to the Participant.

            3.1.3. NO MATCHING CREDITS. No matching amounts shall be credited
for deferrals of Board Compensation under Section 3.1.1.

3.2. DISCRETIONARY SUPPLEMENTS FROM UNITEDHEALTH GROUP. Upon written notice to
one or more Participants and to the Committee, the Board of Directors may (but
is not required to) determine that additional amounts shall be credited to the
Accounts of such Participants. Such notice shall also specify the date of such
crediting. Notwithstanding Section 6, such notice may also establish vesting
rules for such amounts, in which case separate Accounts shall be established for
such amounts for such Participants.

3.3. CREDITS LIMITED TO OUTSIDE DIRECTORS. No Participant who becomes an
employee of UnitedHealth Group or any affiliate shall be eligible to receive
credits under this Section 3 while such an employee.



                                       -3-


                                    SECTION 4

                       CREDITS FROM MEASURING INVESTMENTS

4.1. DESIGNATION OF MEASURING INVESTMENTS. Through a voice response system (or
other written or electronic means) approved by the Committee, each Participant
shall designate the following "Measuring Investments," which shall be used to
determine the value of such Participant's Account (until changed as provided
herein):

            (a)            One or more Measuring Investments for the current
                           Account balance, and

            (b)            One or more Measuring Investments for amounts that
                           are credited to the Account in the future.

The Accounts and such Measuring Investments are specified solely as a device for
computing the amount of benefits to be paid by UnitedHealth Group under the
Plan, and UnitedHealth Group is not required to purchase such investments. The
Measuring Investments as of January 1, 2002 are listed in Schedule I to the Plan
Statement. Schedule I to the Plan Statement may be revised and amended by the
Committee, in its discretion, from time to time.

4.2. UNITEDHEALTH GROUP STOCK AS MEASURING INVESTMENT. The Board of Directors
may (but shall not be required to) determine that the Measuring Investments
available for election by Participants will include deemed (but not actual)
investment in the common stock of UnitedHealth Group, valued at the closing
price of the common stock of UnitedHealth Group as reported on the New York
Stock Exchange composite tape on the applicable Valuation Date.

4.3. OPERATIONAL RULES FOR MEASURING INVESTMENTS. The Committee may adopt rules
specifying the Measuring Investments, the circumstances under which a particular
Measuring Investment may be elected, or shall be automatically utilized, the
minimum or maximum amount or percentage of an Account which may be allocated to
a Measuring Investment, the procedures for making or changing Measuring
Investment elections, the extent (if any) to which Beneficiaries of deceased
Participants may make Measuring Investment elections and the effect of a
Participant's or Beneficiary's failure to make an effective Measuring Investment
election with respect to all or any portion of an Account.

4.4. MEASURING INVESTMENTS AND RULES TO BE IDENTICAL TO EXECUTIVE SAVINGS PLAN.
Unless the Committee specifies otherwise, the Measuring Investments and
operational rules for this Plan shall be identical to those under the
UnitedHealth Group Executive Savings Plan and any change to the Measuring
Investments or operational rules under the Executive Savings Plan shall
automatically apply to this Plan.



                                       -4-


                                    SECTION 5

                                OPERATIONAL RULES

5.1. OPERATIONAL RULES FOR DEFERRALS. A Participant's election to defer Board
Compensation under Section 3 shall be "evergreen" and shall remain in effect
until changed by the Participant for a future Plan Year as specified in Section
3.1.1.

5.2. ESTABLISHMENT OF ACCOUNTS. There shall be established for each Participant
an unfunded, bookkeeping Account which shall be adjusted each Valuation Date.

5.3. ACCOUNTING RULES. The Committee may adopt (and revise) accounting rules for
the Accounts.

                                    SECTION 6

                               VESTING OF ACCOUNTS

The Account of each Participant shall be fully (100%) vested and nonforfeitable
at all times (except for any special vesting rules that apply to discretionary
supplements of UnitedHealth Group under Section 3.2 and any early distribution
penalties that may apply under Section 8).

                                    SECTION 7

                              SPENDTHRIFT PROVISION

Participants and Beneficiaries shall have no power to transfer any interest in
an Account nor shall any Participant or Beneficiary have any power to
anticipate, alienate, dispose of, pledge or encumber the same while it is in the
possession or control of UnitedHealth Group, nor shall the Committee recognize
any assignment thereof, either in whole or in part, nor shall the Account be
subject to attachment, garnishment, execution following judgment or other legal
process (including without limitation any domestic relations order, whether or
not a "qualified domestic relations order" under section 414(p) of the Code)
before the Account is distributed to the Participant or Beneficiary.

The power to designate Beneficiaries to receive the Account of a Participant in
the event of such Participant's death shall not permit or be construed to permit
such power or right to be exercised by the Participant so as thereby to
anticipate, pledge, mortgage or encumber such Participant's Account or any part
thereof. Any attempt by a Participant to so exercise said power in violation of
this provision shall be of no force and effect and shall be disregarded by the
Committee.



                                       -5-



                                    SECTION 8

                                  DISTRIBUTIONS

8.1. TIME OF DISTRIBUTION TO PARTICIPANT.

            8.1.1. GENERAL RULE. A Participant's Account shall be distributable
upon the Termination of Directorship of the Participant.

            8.1.2. NO APPLICATION FOR DISTRIBUTION REQUIRED. A Participant's
Account shall be distributed automatically following the Participant's
Termination of Directorship. A Participant shall not be required to apply for
distribution.

8.2. FORM OF DISTRIBUTION. As determined under the rules of Section 8.3,
distribution of the Participant's Account shall be made in one of the following
forms:

            (a)            IMMEDIATE LUMP SUM. In the form of a single lump sum.
                           The amount of such distribution shall be determined
                           as of the January 31 immediately following the Plan
                           Year in which occurs the Participant's Termination of
                           Directorship and shall be actually paid to the
                           Participant as soon as practicable after such
                           determination (but not later than the last day of the
                           following February).

            (b)            INSTALLMENTS. In the form of a series of 5 or 10
                           annual installments, subject to the following rules:

                           (i)      GENERAL RULE. The amount of the first
                                    installment will be determined as of the
                                    January 31 immediately following the Plan
                                    Year in which occurs the Participant's
                                    Termination of Directorship and the amount
                                    of future installments will be determined as
                                    of each following January 31. The amount of
                                    each installment shall be determined by
                                    dividing the Account balance as of the
                                    January 31 as of which the installment is
                                    being paid by the number of remaining
                                    installment payments to be made (including
                                    the payment being determined). Such
                                    installments shall be actually paid as soon
                                    as practicable after each such determination
                                    (but not later than the last day of the
                                    following February).

                           (ii)     IMMEDIATE ACCELERATED PAYMENT. A Participant
                                    who has elected the installment option may,
                                    after Termination of Directorship, elect
                                    through a voice response system (or other
                                    written or electronic means) approved by the
                                    Committee to receive a cash lump sum payment
                                    of the total remaining balance of the
                                    Account (but not part thereof) for any
                                    reason; provided, however, that the Account
                                    balance will be reduced by a penalty of 10%,
                                    and the Participant



                                      -6-


                                    will receive 90% of the Account balance. The
                                    penalty of 10% of the Account balance will
                                    be forfeited to UnitedHealth Group to be
                                    used as the Committee determines in its
                                    discretion. The amount of such distribution
                                    will be determined as of the Valuation Date
                                    coincident with or next following receipt of
                                    the request by the Committee and shall be
                                    actually paid to the Participant as soon as
                                    practicable after such determination.

            (c)            DELAYED LUMP SUM. In the form of a single lump sum
                           following the tenth (10th) anniversary of the
                           Participant's Termination of Directorship, subject to
                           the following rules:

                           (i)      GENERAL RULE. The amount of such
                                    distribution shall be determined as of the
                                    January 31 immediately following the
                                    calendar year in which occurs the tenth
                                    (10th) anniversary of the Participant's
                                    Termination of Directorship. Actual
                                    distribution shall be made as soon as
                                    administratively practicable after such
                                    January 31.

                           (ii)     IMMEDIATE ACCELERATED PAYMENT. A Participant
                                    who has elected the delayed lump sum
                                    distribution option may, after Termination
                                    of Directorship, elect through a voice
                                    response system (or other written or
                                    electronic means) approved by the Committee
                                    to receive a lump sum distribution of the
                                    Account before the tenth (10th) anniversary
                                    of the Participant's Termination of
                                    Directorship; provided, however, that the
                                    Account balance will be reduced by a penalty
                                    of 10%, and the Participant will receive 90%
                                    of the Account balance. The penalty of 10%
                                    of the Account balance will be forfeited to
                                    UnitedHealth Group to be used as the
                                    Committee determines in its discretion.

                           (iii)    DELAYED ACCELERATED PAYMENT. A Participant
                                    who has elected the delayed lump sum
                                    distribution option may, after Termination
                                    of Directorship, make a one-time election
                                    through a voice response system (or other
                                    written or electronic means), approved by
                                    the Committee to receive either a lump sum
                                    distribution of the Account before the tenth
                                    (10th) anniversary of the Participant's
                                    Termination of Directorship, or five (5)
                                    annual installments, subject to the
                                    following rules:

                                    (A)     Any election to receive a lump sum
                                            payment before the tenth (10th)
                                            anniversary of the Participant's
                                            Termination of Directorship must be
                                            received by the Committee no later
                                            than the December 31 of the calendar
                                            year in which occurs



                                      -7-


                                            the eighth (8th) anniversary of the
                                            Participant's Termination of
                                            Directorship.

                                    (B)     Any election to receive five (5)
                                            annual installments must be received
                                            by the Committee no later than the
                                            December 31 the calendar year in
                                            which occurs the fourth (4th)
                                            anniversary of the Participant's
                                            Termination of Directorship.

                                    (C)     Any election to receive either a
                                            lump sum distribution of the
                                            Participant's Account before the
                                            tenth (10th) anniversary of the
                                            Participant's Termination of
                                            Directorship or five (5) annual
                                            installments shall not be effective
                                            until twelve (12) months after it is
                                            received by the Committee (if the
                                            Participant dies before the end of
                                            such 12-month period, such election
                                            shall not be effective).

8.3. ELECTION OF FORM OF DISTRIBUTION BY PARTICIPANT.

            8.3.1. ELECTION AT INITIAL ENROLLMENT. Through a voice response
system (or other written or electronic means) approved by the Committee, each
Participant shall elect at the time of initial enrollment in the Plan whether
distribution shall be made (as described in Section 8.2) in either (i) an
immediate lump sum, (ii) 5 or 10 annual installments, or (iii) a delayed lump
sum following the tenth (10th) anniversary of the Participant's Termination of
Directorship.

            8.3.2. DEFAULT ELECTION OF FORM OF DISTRIBUTION. If a Participant
fails to elect a form of distribution, such Participant shall be deemed to have
elected that distribution be made in an immediate lump sum as described in
Section 8.2(a).

            8.3.3. PERIODIC RE-ELECTION. Through a voice response system (or
other written or electronic means) approved by the Committee, initial and
default distribution elections may be changed by the Participant, provided that:

            (a)            no change shall be effective until twelve (12) months
                           after it is received by the Committee (if the
                           Participant dies before the end of such 12-month
                           period, such change shall not be effective), and

            (b)            no change may be filed within twelve (12) months
                           after the initial election (or, if one or more prior
                           changes has been filed, within twelve (12) months
                           after the latest of such changes was filed).

No spouse, former spouse, Beneficiary or other person shall have any right to
participate in the Participant's decision to revise distribution elections.



                                      -8-


8.4. PAYMENT TO BENEFICIARY UPON DEATH OF PARTICIPANT.

            8.4.1. PAYMENT TO BENEFICIARY WHEN DEATH OCCURS BEFORE TERMINATION
OF DIRECTORSHIP. If a Participant dies before Termination of Directorship, such
Participant's Beneficiary will receive payment of the Participant's Account at
the same time and in the same form the Participant would have received if the
Participant had experienced a Termination of Directorship on the date of death.

            8.4.2. PAYMENT TO BENEFICIARY WHEN DEATH OCCURS AFTER TERMINATION OF
DIRECTORSHIP. If a Participant dies after a Termination of Directorship, the
Participant's Beneficiary shall receive distribution of the Participant's
Account at the same time and in the same form the Participant would have
received if the Participant had survived.

            8.4.3. BENEFICIARY MUST APPLY FOR DISTRIBUTION. Distribution shall
not be made to any Beneficiary until such Beneficiary shall have filed a written
application for benefits in a form acceptable to the Committee and such
application shall have been approved by the Committee.

            8.4.4. ELECTION OF MEASURING INVESTMENTS BY BENEFICIARIES. A
Beneficiary of a deceased Participant shall generally have the same rights to
designate Measuring Investments for the Participant's Account that Participants
have under Section 4. The Committee may adopt (and revise) rules to govern
designations of Measuring Investments by Beneficiaries. Unless changed by the
Committee, the following rules shall apply:

            (a)            The Measuring Investments for the Account of a
                           deceased Participant shall not be changed until the
                           Beneficiary so determines.

            (b)            If a deceased Participant has more than one
                           Beneficiary, the unanimous consent of all
                           Beneficiaries shall be required to change Measuring
                           Investments for such Participant's Account.

8.5. DESIGNATION OF BENEFICIARIES.

            8.5.1. RIGHT TO DESIGNATE. Each Participant may designate, upon
forms to be furnished by and filed with the Committee (or through other means
approved by the Committee), one or more primary Beneficiaries or alternative
Beneficiaries to receive all or a specified part of such Participant's Account
in the event of such Participant's death. The Participant may change or revoke
any such designation from time to time without notice to or consent from any
Beneficiary. No such designation, change or revocation shall be effective unless
executed by the Participant and received by the Committee during the
Participant's lifetime.

            8.5.2. FAILURE OF DESIGNATION. If a Participant:

            (a)            fails to designate a Beneficiary,



                                      -9-


            (a)            designates a Beneficiary and thereafter revokes such
                           designation without naming another Beneficiary, or

            (c)            designates one or more Beneficiaries and all such
                           Beneficiaries so designated fail to survive the
                           Participant,

such Participant's Account, or the part thereof as to which such Participant's
designation fails, as the case may be, shall be payable to the first class of
the following classes of automatic Beneficiaries in which a member survives the
Participant and (except in the case of surviving issue) in equal shares if there
is more than one member in such class surviving the Participant:

            (i)            Participant's surviving spouse;

            (ii)           Participant's surviving issue per stirpes and not per
                           capita;

            (iii)          Participant's surviving parents;

            (iv)           Participant's surviving brothers and sisters; and

            (v)            Representative of Participant's estate.

            8.5.3. DISCLAIMERS BY BENEFICIARIES. A Beneficiary entitled to a
distribution of all or a portion of a deceased Participant's Account may
disclaim an interest therein subject to the following requirements. To be
eligible to disclaim, a Beneficiary must be a natural person, must not have
received a distribution of all or any portion of the Account at the time such
disclaimer is executed and delivered, and must have attained at least age
twenty-one (21) years as of the date of the Participant's death. Any disclaimer
must be in writing and must be executed personally by the Beneficiary before a
notary public. A disclaimer shall state that the Beneficiary's entire interest
in the undistributed Account is disclaimed or shall specify what portion thereof
is disclaimed. To be effective, duplicate original executed copies of the
disclaimer must be both executed and actually delivered to the Committee after
the date of the Participant's death but not later than nine (9) months after the
date of the Participant's death. A disclaimer shall be irrevocable when
delivered to the Committee. A disclaimer shall be considered to be delivered to
the Committee only when actually received by the Committee. The Committee shall
be the sole judge of the content, interpretation and validity of a purported
disclaimer. Upon the filing of a valid disclaimer, the Beneficiary shall be
considered not to have survived the Participant as to the interest disclaimed. A
disclaimer by a Beneficiary shall not be considered to be a transfer of an
interest in violation of any other provisions under this Plan. No other form of
attempted disclaimer shall be recognized by the Committee.

            8.5.4. DEFINITIONS. When used herein and, unless the Participant has
otherwise specified in the Participant's Beneficiary designation, when used in a
Beneficiary designation, "issue" means all persons who are lineal descendants of
the person whose issue are referred to, subject to the following:

            (a)            a legally adopted child and the adopted child's
                           lineal descendants always shall be lineal descendants
                           of each adoptive parent (and of each adoptive
                           parent's lineal ancestors);



                                      -10-


            (b)            a legally adopted child and the adopted child's
                           lineal descendants never shall be lineal descendants
                           of any former parent whose parental rights were
                           terminated by the adoption (or of that former
                           parent's lineal ancestors); except that if, after a
                           child's parent has died, the child is legally adopted
                           by a stepparent who is the spouse of the child's
                           surviving parent, the child and the child's lineal
                           descendants shall remain lineal descendants of the
                           deceased parent (and the deceased parent's lineal
                           ancestors);

            (c)            if the person (or a lineal descendant of the person)
                           whose issue are referred to is the parent of a child
                           (or is treated as such under applicable law) but
                           never received the child into that parent's home and
                           never openly held out the child as that parent's
                           child (unless doing so was precluded solely by
                           death), then neither the child nor the child's lineal
                           descendants shall be issue of the person.

"Child" means an issue of the first generation; "per stirpes" means in equal
shares among living children of the person whose issue are referred to and the
issue (taken collectively) of each deceased child of such person, with such
issue taking by right of representation of such deceased child; and "survive"
and "surviving" mean living after the death of the Participant.

            8.5.5. SPECIAL RULES. Unless the Participant has otherwise specified
in the Participant's Beneficiary designation, the following rules shall apply:

            (a)            If there is not sufficient evidence that a
                           Beneficiary was living at the time of the death of
                           the Participant, it shall be deemed that the
                           Beneficiary was not living at the time of the death
                           of the Participant.

            (b)            The automatic Beneficiaries specified in Section
                           8.5.2 and the Beneficiaries designated by the
                           Participant shall become fixed at the time of the
                           Participant's death so that, if a Beneficiary
                           survives the Participant but dies before the receipt
                           of all payments due such Beneficiary hereunder, such
                           remaining payments shall be payable to the
                           representative of such Beneficiary's estate.

            (c)            If the Participant designates as a Beneficiary the
                           person who is the Participant's spouse on the date of
                           the designation, either by name or by relationship,
                           or both, the dissolution, annulment or other legal
                           termination of the marriage between the Participant
                           and such person shall automatically revoke such
                           designation. (The foregoing shall not prevent the
                           Participant from designating a former spouse as a
                           Beneficiary on a form executed by the Participant and
                           received by the Committee after the date of the legal
                           termination of the marriage between the Participant
                           and such former spouse, and during the Participant's
                           lifetime.)



                                      -11-



            (d)            Any designation of a nonspouse Beneficiary by name
                           that is accompanied by a description of relationship
                           to the Participant shall be given effect without
                           regard to whether the relationship to the Participant
                           exists either then or at the Participant's death.

            (e)            Any designation of a Beneficiary only by statement of
                           relationship to the Participant shall be effective
                           only to designate the person or persons standing in
                           such relationship to the Participant at the
                           Participant's death.

The Committee shall be the sole judge of the content, interpretation and
validity of a purported Beneficiary designation.

8.6. DEATH PRIOR TO FULL DISTRIBUTION. If, at the death of the Participant, any
payment to the Participant was due or otherwise pending but not actually paid,
the amount of such payment shall be included in the Account which is payable to
the Beneficiary (and shall not be paid to the Participant's estate).

8.7. FACILITY OF PAYMENT. In case of minority, incapacity or legal disability of
a Participant or Beneficiary entitled to receive any distribution under this
Plan, payment shall be made, if the Committee shall be advised of the existence
of such condition:

            (a)            to the court-appointed guardian or conservator of
                           such Participant or Beneficiary, or

            (b)            if there is no court-appointed guardian or
                           conservator, to the lawfully authorized
                           representative of the Participant or Beneficiary (and
                           the Committee, in its sole discretion, shall
                           determine whether a person is a lawfully authorized
                           representative for this purpose), or

            (c)            to an institution entrusted with the care or
                           maintenance of the incapacitated or disabled
                           Participant or Beneficiary, provided such institution
                           has satisfied the Committee, in its sole discretion,
                           that the payment will be used for the best interest
                           and assist in the care of such Participant or
                           Beneficiary, and provided further, that no prior
                           claim for said payment has been made by a person
                           described in (a) or (b) above.

Any payment made in accordance with the foregoing provisions of this section
shall constitute a complete discharge of any liability or obligation of
UnitedHealth Group therefor.

8.8. IN-SERVICE DISTRIBUTIONS.

            8.8.1. PRE-SELECTED IN-SERVICE DISTRIBUTIONS. Each Participant has a
one-time opportunity, when initially enrolling in the Plan, to elect that
distribution be made to such Participant on one or more in-service distribution
dates prior to Termination of Directorship or death under the following rules:



                                      -12-


            (a)            Through a voice response system (or other written or
                           electronic means) approved by the Committee, the
                           Participant may request a pre-selected in-service
                           distribution.

            (b)            No such distribution will be made before January 1 of
                           the year that follows the third full Plan Year after
                           the Participant first enrolled.

            (c)            Only one such in-service distribution will be made in
                           any Plan Year.

            (d)            Through a voice response system (or other written or
                           electronic means) approved by the Committee, the
                           Participant may request only once that any
                           pre-selected distribution date be extended. The
                           Participant must file the extension request with the
                           Committee at least twelve (12) months before the
                           scheduled date of distribution.

            (e)            Through a voice response system (or other written or
                           electronic means) approved by the Committee, the
                           Participant may request that any pre-selected
                           distribution date be cancelled (whether or not
                           previously extended). The Participant must file the
                           cancellation request with the Committee at least
                           twelve (12) months before the scheduled date of
                           distribution.

            (f)            The distribution amount shall be determined as of the
                           Valuation Date coincident with or next following the
                           pre-selected distribution date and shall be actually
                           paid as soon as practicable after such determination.

            (g)            If the Participant dies or experiences a Termination
                           of Directorship before the scheduled pre-selected
                           in-service distribution date, no distribution shall
                           be made on such date.

            8.8.2. ON DEMAND IN-SERVICE DISTRIBUTIONS.

            (a)            ELECTION. Through a voice response system (or other
                           written or electronic means) approved by the
                           Committee, a Participant may elect to receive all or
                           a portion of such Participant's Account prior to
                           Termination of Directorship for any reason; provided,
                           however, that the requested distribution amount will
                           be reduced by a penalty equal to 10% of the requested
                           amount, and the Participant will receive 90% of the
                           requested amount. The penalty of 10% of the requested
                           amount will be forfeited to UnitedHealth Group to be
                           used as the Committee determines in its discretion.

            (b)            DISTRIBUTION AMOUNT. The amount of such distribution
                           shall be determined as of the Valuation Date
                           coincident with or next following receipt of the
                           request by the Committee and shall be actually paid
                           to the Participant as soon as practicable after such
                           determination.



                                      -13-


            (c)            SUSPENSION RULE. If a Participant receives such a
                           distribution, the Participant's deferrals under
                           Section 3 will cease as soon as administratively
                           practicable following the date such distribution is
                           made. The Participant may not again elect to defer
                           compensation under this Plan until the enrollment
                           period for the Plan Year that begins at least six (6)
                           months after such distribution.

            8.8.3. IN-SERVICE DISTRIBUTION FOR FINANCIAL HARDSHIP.

            (a)            ELECTION. A Participant may elect in writing to
                           receive all or part of the Participant's Account
                           prior to Termination of Directorship to alleviate a
                           Financial Hardship. A Beneficiary of a deceased
                           Participant may also request an early distribution
                           for Financial Hardship.

            (b)            FINANCIAL HARDSHIP DEFINED. For purposes of this
                           Plan, "Financial Hardship" means a severe financial
                           hardship to the Participant resulting from a sudden
                           and unexpected illness or accident of the Participant
                           or a dependent (as defined in section 152(a) of the
                           Code), loss of the Participant's property due to
                           casualty, or other similar extraordinary and
                           unforeseeable emergency circumstances arising as a
                           result of events beyond the control of the
                           Participant. If a hardship is or may be relieved
                           either (i) through reimbursement or compensation by
                           insurance or otherwise, (ii) by liquidation of the
                           Participant's assets (to the extent the liquidation
                           of such assets would not itself cause severe
                           financial hardship), or (iii) by cessation of
                           deferrals under this Plan or any 401(k) plan, then
                           the hardship shall not constitute a Financial
                           Hardship for purposes of this Plan. If a Beneficiary
                           of a deceased Participant requests an early
                           distribution for Financial Hardship, then the
                           references in this definition to "Participant" shall
                           be deemed to be references to such Beneficiary.

            (c)            DISTRIBUTION AMOUNT. The amount of such distribution
                           shall be determined as of the Valuation Date next
                           preceding approval of the request by the Committee
                           and shall be actually paid as soon as practicable
                           after such approval.

            (d)            SUSPENSION RULE. If a Participant receives a
                           distribution due to Financial Hardship, the
                           Participant's deferrals under Section 3 will cease as
                           soon as administratively practicable following the
                           date such distribution is made. The Participant may
                           not again elect to defer compensation under this Plan
                           until the enrollment period for the Plan Year that
                           begins at least six (6) months after such
                           distribution.



                                      -14-


8.9. DISTRIBUTIONS IN CASH. All distributions from this Plan shall be made in
cash.

                                    SECTION 9

                                 FUNDING OF PLAN

9.1. UNFUNDED PLAN. The obligation of UnitedHealth Group to make payments under
the Plan constitutes only the unsecured (but legally enforceable) promises of
UnitedHealth Group to make such payments. No Participant shall have any lien,
prior claim or other security interest in any property of UnitedHealth Group.
UnitedHealth Group shall have no obligation to establish or maintain any fund,
trust or account (other than a bookkeeping account) for the purpose of funding
or paying the benefits promised under the Plan. If such a fund, trust or account
is established, the property therein shall remain the sole and exclusive
property of UnitedHealth Group. UnitedHealth Group shall be obligated to pay the
cost of the Plan out of its general assets. All references to accounts,
accruals, gains, losses, income, expenses, payments, custodial funds and the
like are included merely for the purpose of measuring the obligation of
UnitedHealth Group to Participants in the Plan and shall not be construed to
impose on UnitedHealth Group the obligation to create any separate fund for
purposes of the Plan.

9.2. CORPORATE OBLIGATION. Neither any officer of UnitedHealth Group nor any
member of the Committee in any way secures or guarantees the payment of any
benefit or amount which may become due and payable hereunder to or with respect
to any Participant. Each Participant and other person entitled at any time to
payments hereunder shall look solely to the assets of UnitedHealth Group for
such payments as an unsecured, general creditor. After benefits have been paid
to or with respect to a Participant and such payment purports to cover in full
the benefit hereunder, such former Participant or other person or persons, as
the case may be, shall have no further right or interest in any other Plan
assets. No person shall be under any liability or responsibility for failure to
effect any of the objectives or purposes of this Plan by reason of the
insolvency of UnitedHealth Group.

                                   SECTION 10

                            AMENDMENT AND TERMINATION

10.1. AMENDMENT AND TERMINATION. The Committee may unilaterally amend the Plan
Statement prospectively, retroactively or both, at any time and for any reason
deemed sufficient by it without notice to any person affected by this Plan, and
the Board of Directors may terminate this Plan both with regard to persons
receiving benefits and persons expecting to receive benefits in the future;
provided, however, that:



                                      -15-


            (a)            NO REDUCTION OR DELAY. The benefit, if any, payable
                           to or with respect to a Participant, whether or not
                           the Participant has had a Termination of Directorship
                           as of the effective date of such amendment, shall not
                           be, without the written consent of the Participant,
                           diminished or delayed by such amendment.

            (b)            CASH LUMP SUM PAYMENT. If the Board of Directors
                           terminates the Plan completely, all Accounts under
                           the Plan shall be automatically and immediately
                           distributed in single lump sum payments.

10.2. NO ORAL AMENDMENTS. No oral representation concerning the interpretation
or effect of the Plan Statement shall be effective to amend the Plan Statement.
No amendment of the Plan Statement shall be effective unless it is in writing
and signed on behalf of the Committee by a person authorized to execute such
writing. No termination of the Plan shall be effective unless it is in writing
and signed on behalf of the Board of Directors by a person authorized to execute
such writing.

10.3. PLAN BINDING ON SUCCESSORS. UnitedHealth Group shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise of
all or substantially all of the business and/or assets of UnitedHealth Group),
by agreement, to expressly assume and agree to perform this Plan Statement in
the same manner and to the same extent that UnitedHealth Group would be required
to perform it if no such succession had taken place.

                                   SECTION 11

                     DETERMINATIONS -- RULES AND REGULATIONS

11.1. DETERMINATIONS. The Committee shall make such determinations as may be
required from time to time in the administration of the Plan. The Committee
shall have the discretionary authority and responsibility to interpret and
construe the Plan Statement and to determine all factual and legal questions
under the Plan, including but not limited to the entitlement of Participants and
Beneficiaries, and the amounts of their respective interests. Each interested
party may act and rely upon all information reported to them hereunder and need
not inquire into the accuracy thereof, nor be charged with any notice to the
contrary.

11.2. RULES AND REGULATIONS. Any rule not in conflict or at variance with the
provisions hereof may be adopted by the Committee.

11.3. METHOD OF EXECUTING INSTRUMENTS. Information to be supplied or written
notices to be made or consents to be given by the Committee pursuant to any
provision of the Plan Statement may be signed in the name of the Committee by
any officer who has been authorized to make such certification or to give such
notices or consents.



                                      -16-




11.4. CLAIMS PROCEDURE. The claims procedure set forth in this Section 11.4
shall be the exclusive administrative procedure for the disposition of claims
for benefits arising under the Plan.

            11.4.1. ORIGINAL CLAIM. Any person may, if he or she so desires,
file with the Committee a written claim for benefits under the Plan. Within
ninety (90) days after the filing of such a claim, the Committee shall notify
the claimant in writing whether the claim is upheld or denied in whole or in
part or shall furnish the claimant a written notice describing specific special
circumstances requiring a specified amount of additional time (but not more than
one hundred eighty (180) days from the date the claim was filed) to reach a
decision on the claim. If the claim is denied in whole or in part, the Committee
shall state in writing:

            (a)            the specific reasons for the denial;

            (b)            the specific references to the pertinent provisions
                           of the Plan Statement on which the denial is based;

            (c)            a description of any additional material or
                           information necessary for the claimant to perfect the
                           claim and an explanation of why such material or
                           information is necessary; and

            (d)            an explanation of the claims review procedure set
                           forth in this section.

            11.4.2. REVIEW OF DENIED CLAIM. Within sixty (60) days after receipt
of notice that the claim has been denied in whole or in part, the claimant may
file with the Committee a written request for a review and may, in conjunction
therewith, submit written issues and comments. Within sixty (60) days after the
filing of such a request for review, the Committee shall notify the claimant in
writing whether, upon review, the claim was upheld or denied in whole or in part
or shall furnish the claimant a written notice describing specific special
circumstances requiring a specified amount of additional time (but not more than
one hundred twenty (120) days from the date the request for review was filed) to
reach a decision on the request for review. If the claimant wishes to seek
further review of the Committee's decision upon review, the claimant shall
submit the claim (or dispute or complaint) to binding arbitration pursuant to
the rules of the American Arbitration Association. This is the only right a
complainant has for further consideration. The matter must be submitted to
binding arbitration within one (1) year of receipt of notice of the Committee's
final decision upon review. The arbitrators shall have no power to award any
punitive or exemplary damages or to vary or ignore the provisions of the Plan
Statement and shall be bound by controlling law.

            11.4.3. GENERAL RULES.

            (a)            No inquiry or question shall be deemed to be a claim
                           or a request for a review of a denied claim unless
                           made in accordance with the claims procedure. The
                           Committee may require that any claim for benefits and
                           any request for a review of a denied claim be filed
                           on forms to be furnished by the Committee upon
                           request.



                                      -17-


            (b)            All decisions on original claims and all decisions on
                           requests for a review of denied claims shall be made
                           by the Committee.

            (c)            The Committee may, in its discretion, hold one or
                           more hearings on a claim or a request for a review of
                           a denied claim.

            (d)            A claimant may be represented by a lawyer or other
                           representative (at the claimant's own expense), but
                           the Committee reserves the right to require the
                           claimant to furnish written authorization. A
                           claimant's representative shall be entitled, upon
                           request, to copies of all notices given to the
                           claimant.

            (e)            The decision of the Committee on a claim and a
                           decision of the Committee on a request for a review
                           of a denied claim shall be served on the claimant in
                           writing. If a decision or notice is not received by a
                           claimant within the time specified, the claim or
                           request for a review of a denied claim shall be
                           deemed to have been denied.

            (f)            Prior to filing a claim or a request for a review of
                           a denied claim, the claimant or his or her
                           representative shall have a reasonable opportunity to
                           review a copy of the Plan Statement and all other
                           pertinent documents in the possession of the
                           Committee.

            (g)            The Committee may permanently or temporarily delegate
                           its responsibilities under this claims procedure to
                           an individual or a committee of individuals.

11.5. LIMITATIONS AND EXHAUSTION.

            11.5.1. LIMITATIONS. No claim shall be considered under these
administrative procedures unless it is filed with the Committee within one (1)
year after the claimant knew (or reasonably should have known) of the principal
facts on which the claim is based. Every untimely claim shall be denied by the
Committee without regard to the merits of the claim. No legal action (whether
arising under any statute or non-statutory law) may be brought by any claimant
on any matter pertaining to the Plan unless the legal action is commenced in the
proper forum before the earlier of:

            (a)            two (2) years after the claimant knew (or reasonably
                           should have known) of the principal facts on which
                           the claim is based, or

            (b)            ninety (90) days after the claimant has exhausted
                           these administrative procedures.

Knowledge of all facts that a Participant knew (or reasonably should have known)
shall be imputed to each claimant who is or claims to be a Beneficiary of the
Participant (or otherwise



                                      -18-


claims to derive an entitlement by reference to a Participant) for the purpose
of applying the one (1) year and two (2) year periods.

            11.5.2. EXHAUSTION REQUIRED. The exhaustion of these administrative
procedures is mandatory for resolving every claim and dispute arising under the
Plan. As to such claims and disputes:

            (a)            no claimant shall be permitted to commence any legal
                           action relating to any such claim or dispute (whether
                           arising under any statute or non-statutory law)
                           unless a timely claim has been filed under these
                           administrative procedures and these administrative
                           procedures have been exhausted; and

            (b)            in any such legal action all explicit and implicit
                           determinations by the Committee (including, but not
                           limited to, determinations as to whether the claim
                           was timely filed) shall be afforded the maximum
                           deference permitted by law.

                                   SECTION 12

                               PLAN ADMINISTRATION

12.1. OFFICERS. Except as hereinafter provided, functions generally assigned to
UnitedHealth Group shall be discharged by its officers or delegated and
allocated as provided herein.

12.2. CHIEF EXECUTIVE OFFICER. Except as hereinafter provided, the Chief
Executive Officer of UnitedHealth Group may delegate or redelegate and allocate
and reallocate to one or more persons or to a committee of persons jointly or
severally, and whether or not such persons are directors, officers or employees,
such functions assigned to UnitedHealth Group generally hereunder as he or she
may from time to time deem advisable.

12.3. BOARD OF DIRECTORS. Notwithstanding the foregoing, the Board of Directors
shall have the sole authority to terminate the Plan.

12.4.       COMMITTEE.  The Committee shall:

            (a)            keep a record of all its proceedings and acts and
                           keep all books of account, records and other data as
                           may be necessary for the proper administration of the
                           Plan; notify UnitedHealth Group of any action taken
                           by the Committee and, when required, notify any other
                           interested person or persons;



                                      -19-


            (b)            determine from the records of UnitedHealth Group the
                           compensation, status and other facts regarding
                           Participants;

            (c)            prescribe forms to be used for distributions,
                           notifications, etc., as may be required in the
                           administration of the Plan;

            (d)            set up such rules, applicable to all Participants
                           similarly situated, as are deemed necessary to carry
                           out the terms of this Plan Statement;

            (e)            perform all other acts reasonably necessary for
                           administering the Plan and carrying out the
                           provisions of this Plan Statement and performing the
                           duties imposed on it by the Board of Directors;

            (f)            resolve all questions of administration of the Plan
                           not specifically referred to in this section;

            (g)            provide adequate notice in writing to any claimant
                           whose claim for benefits under the Plan has been
                           denied, setting forth the specific reasons for such
                           denial, written in a manner calculated to be
                           understood by the claimant; and

            (h)            delegate or redelegate to one or more persons,
                           jointly or severally, and whether or not such persons
                           are members of the Committee or employees of
                           UnitedHealth Group, such functions assigned to the
                           Committee hereunder as it may from time to time deem
                           advisable.

If there shall at any time be three (3) or more members of the Committee serving
hereunder who are qualified to perform a particular act, the same may be
performed, on behalf of all, by a majority of those qualified, with or without
the concurrence of the minority. No person who failed to join or concur in such
act shall be held liable for the consequences thereof.

12.5. DELEGATION. The Board of Directors and the members of the Committee shall
not be liable for an act or omission of another person with regard to a
responsibility that has been allocated to or delegated to such other person
pursuant to the terms of the Plan Statement or pursuant to procedures set forth
in the Plan Statement.

12.6. CONFLICT OF INTEREST. If any individual to whom authority has been
delegated or redelegated hereunder shall also be a Participant in the Plan, such
Participant shall have no authority with respect to any matter specially
affecting such Participant's individual rights hereunder (as distinguished from
the rights of all Participants and Beneficiaries or a broad class of
Participants and Beneficiaries), all such authority being reserved exclusively
to other individuals as the case may be, to the exclusion of such Participant,
and such Participant shall act only in such Participant's individual capacity in
connection with any such matter.

12.7. SERVICE OF PROCESS. In the absence of any designation to the contrary by
the Committee, the General Counsel of UnitedHealth Group is designated as the
appropriate and



                                      -20-


exclusive agent for the receipt of process directed to this Plan in any legal
proceeding, including arbitration, involving the Plan.

12.8. EXPENSES. The expenses of administering this Plan shall be payable out of
the trust fund, if any, established for this Plan except to the extent that
UnitedHealth Group, in its discretion, directly pays the expenses. If no such
trust fund exists, UnitedHealth Group shall pay such expenses.

12.9. CERTIFICATIONS. Information to be supplied or written notices to be made
or consents to be given by the Committee pursuant to any provision of this Plan
Statement may be signed in the name of the Committee by any officer who has been
authorized to make such certification or to give such notices or consents.

12.10. ERRORS IN COMPUTATIONS. UnitedHealth Group shall not be liable or
responsible for any error in the computation of the Account or the determination
of any benefit payable to or with respect to any Participant resulting from any
misstatement of fact made by the Participant or by or on behalf of any survivor
to whom such benefit shall be payable, directly or indirectly, to UnitedHealth
Group and used by the Committee in determining the benefit. The Committee shall
not be obligated or required to increase the benefit payable to or with respect
to such Participant which, on discovery of the misstatement, is found to be
understated as a result of such misstatement of the Participant. However, the
benefit of any Participant which is overstated by reason of any such
misstatement or any other reason shall be reduced to the amount appropriate in
view of the truth (and to recover any prior overpayment).

                                   SECTION 13

                                  CONSTRUCTION

13.1. APPLICABLE LAWS.

            13.1.1. ERISA STATUS. Since no employee of UnitedHealth Group or any
affiliate may actively participate in this Plan (see Sections 2 and 3.3), this
Plan is not subject to regulation under the Employee Retirement Income Security
Act of 1974 ("ERISA").

            13.1.2. IRC STATUS. The Plan is intended to be a nonqualified,
unfunded, deferred compensation arrangement.

            13.1.3. REFERENCES TO LAWS. Any reference in the Plan Statement to a
statute or regulation shall be considered also to mean and refer to any
subsequent amendment or replacement of that statute or regulation.



                                      -21-


13.2. EFFECT ON OTHER PLANS. This Plan Statement shall not alter, enlarge or
diminish any person's rights or obligations under any other benefit plan for
members of the Board of Directors.

13.3. DISQUALIFICATION. Notwithstanding any other provision of the Plan
Statement or any election or designation made under the Plan, any potential
Beneficiary who feloniously and intentionally kills a Participant shall be
deemed for all purposes of the Plan and all elections and designations made
under the Plan to have died before such Participant. A final judgment of
conviction of felonious and intentional killing is conclusive for this purpose.
In the absence of a conviction of felonious and intentional killing, the
Committee shall determine whether the killing was felonious and intentional for
this purpose.

13.4. RULES OF DOCUMENT CONSTRUCTION.

            (a)            Whenever appropriate, words used herein in the
                           singular may be read in the plural, or words used
                           herein in the plural may be read in the singular; the
                           masculine may include the feminine; and the words
                           "hereof," "herein" or "hereunder" or other similar
                           compounds of the word "here" shall mean and refer to
                           the entire Plan Statement and not to any particular
                           paragraph or Section of the Plan Statement unless the
                           context clearly indicates to the contrary.

            (b)            The titles given to the various Sections of the Plan
                           Statement are inserted for convenience of reference
                           only and are not part of the Plan Statement, and they
                           shall not be considered in determining the purpose,
                           meaning or intent of any provision hereof.

            (c)            Notwithstanding any thing apparently to the contrary
                           contained in the Plan Statement, the Plan Statement
                           shall be construed and administered to prevent the
                           duplication of benefits provided under the Plan and
                           any other plan maintained in whole or in part by
                           UnitedHealth Group.

13.5. CHOICE OF LAW. This instrument has been executed and delivered in the
State of Minnesota and has been drawn in conformity to the laws of that State
and shall be construed and enforced in accordance with the laws of the State of
Minnesota.

This Plan Statement was approved by the Board of Directors on October 30, 2001.

                                        UNITEDHEALTH GROUP
                                        INCORPORATED


                                        By:
                                           ------------------------------------
                                           David J. Lubben, General Counsel and
                                           Secretary



                                      -22-


                                   SCHEDULE I

                              MEASURING INVESTMENTS

A. MEASURING INVESTMENTS AS OF JANUARY 1, 2002. The following are the Measuring
Investments as of January 1, 2002:

            1.             One-Choice Conservative-- American Century Strategic
                           Allocation: Conservative Fund

            2.             One-Choice Moderate-- American Century Strategic
                           Allocation: Moderate Fund

            3.             One-Choice Aggressive-- American Century Strategic
                           Allocation: Aggressive Fund

            4.             Bond Index -- Vanguard Total Bond Market Index Fund

            5.             S & P 500 Index-- First American Index Fund

            6.             Wilshire 4500 Index-- Vanguard Extended Market Index
                           Fund

            7.             Money Market -- First American Prime Obligations Fund

            8.             Stable Value -- Wells Fargo Stable Income Fund

            9.             Bond -- Loomis Sayles Bond Fund

            10.            Large-Cap -- Dodge & Cox Stock Fund

            11.            Large-Cap Growth -- Alliance Premier Growth Fund

            12.            Mid-Cap Value -- Sound Share Fund

            13.            Mid-Cap Growth -- Wanburg Pincus Emerging Growth Fund

            14.            International Value -- Templeton Foreign Fund

            15.            International Growth -- American Century
                           International Growth Fund

            16.            Small-Cap Value -- Loomis Sayles Small-Cap Value Fund

            17.            Small-Cap Growth -- Loomis Sayles Small-Cap Growth
                           Fund

            18.            Mid-Cap Growth -- PBHG Growth Fund



                                      SI-1


B. DEFAULT RULES. If a Participant does not designate which Measuring
Investments shall be used to determine the value of the Participant's Account,
the default Measuring Investment shall be the American Century Strategic
Allocation Conservative Fund.



                                      SI-2

EX-10.(L)

                                                                   EXHIBIT 10(1)

                              EMPLOYMENT AGREEMENT

         This Agreement, effective as of October 16, 1998 (the "Effective
Date"), is made by and between Robert J. Sheehy ("Executive") and United
HealthCare Services, Inc. ("United HealthCare") for the purpose of setting forth
the terms and conditions of Executive's employment by United HealthCare, or an
affiliate or subsidiary of United HealthCare, and to protect United HealthCare's
knowledge, expertise, customer relationships and the confidential information
United HealthCare has developed about its customers, products, operations and
services. Unless the context otherwise requires, when used in this Agreement
"United HealthCare" includes any entity affiliated with United HealthCare.

         WHEREAS, as additional consideration for entering into this Agreement
Executive shall receive, upon execution of this Agreement, a nonqualified stock
option to purchase 60,000 shares of United HealthCare Corporation ("UHC") common
stock with a grant date the same as the Effective Date pursuant to the terms of
the UHC Amended and Restated 1991 Stock and Incentive Plan.

         WHEREAS, Executive and United HealthCare desire to enter into this
Agreement, which shall supersede any and all other prior employment-related
agreements between Executive and United HealthCare.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and intending to be legally bound hereby, the parties
hereto agree as follows:

1. EMPLOYMENT AND DUTIES; TERMINATION OF PRIOR AGREEMENTS.

         A. EMPLOYMENT. United HealthCare hereby employs Executive, either
         directly or through an affiliate or subsidiary of United HealthCare,
         and Executive hereby accepts such employment on the terms and
         conditions set forth in this Agreement. Except as specifically
         superseded by this Agreement, Executive's employment hereunder shall be
         subject to all of United HealthCare's policies and procedures in regard
         to its employees. Executive's employment hereunder shall begin on the
         Effective Date and shall continue until terminated as set forth in
         Section 3 hereof.

         B. DUTIES. Executive shall initially hold the executive level position
         of COO, Health Plans and perform the duties associated therewith.
         Executive shall perform such other executive level responsibilities as
         are reasonably assigned Executive from time to time. Executive agrees
         to devote substantially all of Executive's business time and energy to
         the performance of Executive's duties in a diligent and proper manner.

         C. TERMINATION OF PRIOR AGREEMENTS. As of the Effective Date all other
         prior employment related agreements between Executive and United
         HealthCare will terminate in their entirety and no longer be of any
         force or effect.



 2. COMPENSATION.

         A. BASE SALARY. Executive shall initially be paid a base annual salary
         in the amount of $350,000, payable bi-weekly, less all applicable
         withholdings and deductions (the "Initial Base Salary"). Executive
         shall receive a periodic performance review and consideration for an
         increase in the Initial Base Salary.

         B. BONUS AND STOCK PLANS. Executive shall be eligible to participate in
         the incentive compensation plans and the stock option and grant plans
         maintained by United HealthCare or an affiliate or subsidiary of United
         HealthCare, in the sole discretion of United HealthCare and in
         accordance with the terms and conditions of those plans and applicable
         laws and regulations.

         C. EMPLOYEE BENEFITS. Executive shall be eligible to participate in the
         employee benefit plans maintained by either United HealthCare or an
         affiliate or subsidiary of United HealthCare, including without
         limitation, any life, health, dental, short-term and long-term
         disability insurance coverages and any retirement plans, in the sole
         discretion of United HealthCare and in accordance with the terms and
         conditions of those plans and applicable laws and regulations.

         D. VACATION; ILLNESS. Executive shall be eligible for paid vacation and
         sick leave each year in accordance with the then-current policies of
         either United HealthCare or an affiliate or subsidiary of United
         HealthCare, in the sole discretion of United HealthCare and in
         accordance with the terms and conditions of those plans and applicable
         laws and regulations.

3. TERM AND TERMINATION.

         A. TERM. The term of this Agreement shall begin on the Effective Date
         and shall continue until terminated as set forth in Section 3B.

         B. TERMINATION OF AGREEMENT.

                  1. BY MUTUAL AGREEMENT. This Agreement and Executive's
                  employment hereunder may be terminated at any time by the
                  mutual written agreement of the parties.

                  2. BY UNITED HEALTHCARE. United HealthCare may terminate this
                  Agreement and Executive's employment hereunder on 30 days'
                  written notice.

                  3. BY EXECUTIVE. Executive may terminate this Agreement and
                  Executive's employment hereunder on 30 days' written notice.

                  4. DEATH, DISABILITY, ETC. This Agreement and Executive's
                  employment by United HealthCare shall terminate immediately
                  upon Executive's death. This Agreement and Executive's
                  employment hereunder shall automatically terminate in the
                  event of a permanent and total disability which renders
                  Executive incapable of


                                       -2-


                  performing Executive's duties, with or without reasonable
                  accommodation. United HealthCare has the sole discretion to
                  determine whether Executive is permanently or totally disabled
                  with the meaning of this Section 3B4, and the effective date
                  on which Executive was rendered so disabled.

         C. EMPLOYEE BENEFITS. On the effective date of the termination of this
         Agreement and Executive's employment by United HealthCare, Executive
         shall cease to be eligible for all employee benefit plans maintained by
         United HealthCare, except as required by federal or state continuation
         of coverage laws ("COBRA Benefits"). If Executive elects COBRA
         Benefits, Executive shall pay the entire cost of such benefits either
         through after-tax payroll deductions from the cash component of any
         severance compensation Executive receives or directly if Executive does
         not receive such severance compensation or if such severance
         compensation ceases.

         D. SEVERANCE EVENTS AND BENEFITS. If a Severance Event, as hereinafter
         defined, occurs, Executive shall receive the severance benefits set
         forth in this Section 3D for a period of 12 months from the effective
         date of the applicable Severance Event (the "Severance Period"). For
         purposes of this Agreement a Severance Event shall occur if and when:

         (i)      United HealthCare (a) terminates this Agreement and
                  Executive's employment without Cause, as hereinafter defined,
                  or (b) terminates this Agreement without terminating
                  Executive's employment and Executive elects to treat such
                  termination of this Agreement as a Change in Employment, as
                  hereinafter defined (collectively a "Termination without
                  Cause"), or

         (ii)     Within two years following a Change in Control, as hereinafter
                  defined, either (a) United HealthCare terminates this
                  Agreement and Executive's employment without Cause, or (b) a
                  Change in Employment occurs and Executive elects to treat such
                  Change in Employment as a termination of Executive's
                  employment (collectively a "Termination following a Change in
                  Control").

         1. SEVERANCE COMPENSATION. Executive shall receive the following
         severance compensation (the "Severance Compensation"):

                  a) TERMINATION WITHOUT CAUSE. Subject to Section 3D(1)(b)
                  below, upon a Termination without Cause Executive shall
                  receive biweekly payments equal to 1/26 of two times the sum
                  of (1) Executive's annualized base salary as of the date of
                  the Severance Event, less all applicable withholdings or
                  deductions required by law and Executive's COBRA Benefit
                  payments, if any, plus (2) one-half of the total of any bonus
                  or incentive compensation paid or payable to Executive for the
                  two most recent calendar years (excluding any special or
                  one-time bonus or incentive compensation payments), or if
                  Executive has been eligible for such bonus or incentive
                  compensation payments for less than two such periods, the last
                  such payment paid or payable to Executive (excluding any
                  special or one-time bonus or incentive compensation payments).


                                       -3-



                  b) TERMINATION FOLLOWING A CHANGE IN CONTROL. Upon a
                  Termination following a Change in Control, Executive shall
                  receive biweekly payments equal to 1/26 of three times the sum
                  of (1) Executive's highest annualized base salary during the 2
                  year period immediately preceding the Severance Event, less
                  all applicable withholdings or deductions required by law and
                  Executive's COBRA Benefit payments, if any, plus (2) the
                  greater of (i) all bonuses that would be payable to Executive
                  under any incentive compensation plans in which Executive then
                  participates at Executive's then-current target level, or (ii)
                  one-half of the total of any bonus or incentive compensation
                  paid or payable to Executive for the two most recent calendar
                  years (excluding any special or one-time bonus or incentive
                  compensation payments), or if Executive has been eligible for
                  such bonus or incentive compensation payments for less than
                  two such periods, the last such payment paid or payable to
                  Executive (excluding any special or one-time bonus or
                  incentive compensation payments).

         2. CASH PAYMENT. Executive shall receive a one-time cash payment within
         a reasonable time following commencement of the Severance Period in an
         amount equal to the portion of the premiums that United HealthCare, or
         its affiliate or subsidiary, as applicable, subsidizes for
         employee-only health, dental and group term life benefit coverages (the
         "Cash Payment"). The Cash Payment shall cover the Severance Period and
         shall be determined as of the effective date of the applicable
         Severance Event.

         3. JOB SEARCH FEES. For a period not to exceed the Severance Period,
         United HealthCare shall pay to an outplacement firm selected by United
         HealthCare an amount deemed reasonable by United HealthCare for
         outplacement and job search services for Executive.

         4. EXCISE TAX PAYMENT. If any portion of the Severance Compensation
         payable upon a Termination following a Change in Control constitutes an
         Excess Parachute Payment, as hereinafter defined, such that an Excise
         Tax, as hereinafter defined, is due, Executive shall receive a one-time
         cash payment in an amount sufficient to cover (a) the full cost of the
         Excise Tax plus (b) Executive's federal, state and city income,
         employment and Excise Tax on this one-time cash payment and on all such
         iterative payments so that Executive is made entirely whole for the
         impact of the Excise Tax (collectively the "Gross-Up Payment"). United
         HealthCare shall calculate these amounts on a timely and accurate
         basis, and for this purpose Executive shall be deemed to be in the
         highest marginal rate of federal, state and city taxes. The Gross-Up
         Payment shall be made within 30 days following the effective date of
         Executive's employment termination. For purposes of this Agreement the
         term "Excess Parachute Payment" shall have the meaning set forth in
         Section 28OG of the Internal Revenue Code of 1986, as amended (the
         "Code"). For purposes of this Agreement the term "Excise Tax" shall
         mean the tax imposed on an Excess Parachute Payment pursuant to
         Sections 28OG and 4999 of the Code.


                                       -4-


This Section 3D shall be the sole liability of United HealthCare to Executive
upon the termination of this Agreement and Executive's employment hereunder, and
shall replace and be in lieu of any payments or benefits which otherwise might
be owed Executive under any other severance plan or program maintained by United
HealthCare. Such compensation and benefits shall be conditioned on receipt by
United HealthCare of a separation agreement and a release of claims by Executive
on terms and conditions acceptable to United HealthCare in its sole discretion.

         E. DEFINITIONS AND PROCEDURES.

                  1. CAUSE. For purposes of this Agreement "Cause" shall mean
                  (a) the refusal of Executive to follow the reasonable
                  direction of the Board of Directors of United HealthCare or
                  Executive's supervisor or to perform any duties reasonably
                  required on material matters by United HealthCare, (b)
                  material violations of United HealthCare's Code of Conduct or
                  (c) the commission of any criminal act or act of fraud or
                  dishonesty by Executive in connection with Executive's
                  employment by United HealthCare. Prior to the termination of
                  Executive's employment under subsection (a) of this definition
                  of Cause, United HealthCare shall provide Executive with a 30
                  day notice specifying the basis for Cause. If the Cause
                  described in the notice is cured to United HealthCare's
                  reasonable satisfaction prior to the end of the 30 day notice
                  period, Executive's employment hereunder shall not be
                  terminated on that basis.

                  2. CHANGE IN CONTROL. For purposes of this Agreement "Change
                  in Control" shall mean (a) the acquisition by any person,
                  entity or "group," within the meaning of Section 13(d)(3) or
                  14(d)(2) of the Securities Exchange Act of 1934 (the 'Exchange
                  Act"), other than United HealthCare or any employee benefit
                  plan of United HealthCare, of beneficial ownership (as defined
                  in the Exchange Act) of 20% or more of the common stock of UHC
                  or the combined voting power of UHC's then-outstanding voting
                  securities in a transaction or series of transactions not
                  approved in advanced by a vote of at least three-quarters of
                  the directors of UHC; (b) a change in 50% or more of the
                  directors of UHC in any 12 month period; (c) the approval by
                  the shareholders of UHC of a reorganization, merger,
                  consolidation, liquidation or dissolution of UHC or of the
                  sale (in one transaction or a series of related transactions)
                  of all or substantially all of the assets of UHC other than a
                  reorganization, merger, consolidation, liquidation,
                  dissolution or sale approved in advance by a vote of at least
                  three-quarters of the directors; (d) the first purchase under
                  any tender offer or exchange offer (other than an offer by
                  UHC) pursuant to which shares of UHC common stock are
                  purchased; or (e) at least a majority of the directors of UHC
                  determine in their sole discretion that there has been a
                  change of control of UHC.

                  3. CHANGE IN EMPLOYMENT. For purposes of this Agreement a
                  "Change in Employment" shall be deemed to have occurred (a) if
                  (i) Executive's duties are materially and adversely changed
                  without Executive's prior consent, (ii) Executive's salary or
                  benefits are reduced other than as a general reduction of
                  salaries and


                                       -5-


                  benefits by United HealthCare, (iii) without terminating
                  Executive's employment United HealthCare terminates this
                  Agreement, or (iv) the geographic location for the performance
                  of Executive's duties hereunder is moved more than 50 miles
                  from the geographic location at the Effective Date without
                  Executive's prior consent, and (b) if in each case under
                  subsections (a) (i), (ii), (iii) and (iv), in the period
                  beginning 90 days before the time the Change in Employment
                  occurs, Cause does not exist or if Cause does exist United
                  HealthCare has not given Executive written notice that Cause
                  exists. Notwithstanding the foregoing, an isolated,
                  insubstantial or inadvertent action by United HealthCare,
                  which is remedied by United HealthCare within 30 days after
                  receipt of notice thereof by Executive, shall not constitute a
                  Change in Employment. Executive may elect to treat a Change in
                  Employment as a termination of this Agreement and Executive's
                  employment hereunder. To do so Executive shall send written
                  notice of such election to United HealthCare within 90 days
                  after the date Executive receives notice from United
                  HealthCare or otherwise is definitively informed of the events
                  constituting the Change in Employment. No Change in Employment
                  shall be deemed to have occurred if Executive fails to send
                  the notice of election within the 90 day period. Executive's
                  failure to treat a particular Change in Employment as a
                  termination of employment shall not preclude Executive from
                  treating a subsequent Change in Employment as a termination of
                  employment. The effective date of a Change in Employment
                  termination shall be the date 30 days after United HealthCare
                  receives the written notice of election.

4. PROPERTY RIGHTS, CONFIDENTIALITY. NON-DISPARAGEMENT, NON-SOLICIT AND
NON-COMPETE PROVISIONS.

         A. UNITED HEALTHCARE'S PROPERTY.

                  1. ASSIGNMENT OF PROPERTY RIGHTS. Executive shall promptly
                  disclose to United HealthCare in writing all inventions,
                  discoveries and works of authorship, whether or not patentable
                  or copyrightable, which are conceived, made, discovered,
                  written or created by Executive alone or jointly with another
                  person, group or entity, whether during the normal hours of
                  employment at United HealthCare or on Executive's own time,
                  during the term of this Agreement. Executive assigns, all
                  rights to all such inventions and works of authorship to
                  United HealthCare. Executive shall give United HealthCare any
                  assistance it reasonably requires in order for United
                  HealthCare to perfect, protect, and use its rights to
                  inventions and works of authorship.

                  This provision shall not apply to an invention for which no
                  equipment, supplies, facility or trade secret information of
                  United HealthCare was used and which was developed entirely on
                  the Executive's own time and which (1) does not relate to the
                  business of United HealthCare or to United HealthCare's
                  anticipated research or development, or (2) does not result
                  from any work performed by the Executive for United
                  HealthCare.


                                       -6-


                  2. NO REMOVAL OF PROPERTY. Executive shall not remove any
                  records, documents, or any other tangible items (excluding
                  Executive's personal property) from the premises of United
                  HealthCare in either original or duplicate form, except as is
                  needed in the ordinary course of conducting business for
                  United HealthCare.

                  3. RETURN OF PROPERTY. Executive shall immediately deliver to
                  United HealthCare, upon termination of employment with United
                  HealthCare, or at any other time upon United HealthCare's
                  request, any property, records, documents, and other tangible
                  items (excluding Executive's personal property) in Executive's
                  possession or control, including data incorporated in word
                  processing, computer and other data storage media, and all
                  copies of such records, documents and information, including
                  all Confidential Information, as defined below.

         B. CONFIDENTIAL INFORMATION. During the course of employment Executive
         will develop, become aware of and accumulate expertise, knowledge and
         information regarding United HealthCare's organization, strategies,
         business and operations and United HealthCare's past, current or
         potential customers and suppliers. United HealthCare considers such
         expertise, knowledge and information to be valuable, confidential and
         proprietary and it shall be considered Confidential Information for
         purposes of this Agreement. During this Agreement and at all times
         thereafter Executive shall not use such Confidential Information or
         disclose it to other persons or entities except as is necessary for the
         performance of Executive's duties for United HealthCare or as has been
         expressly permitted in writing by United HealthCare. This Section 4B
         shall survive the termination of this Agreement.

         C. NON-DISPARAGEMENT. Executive agrees that he will not criticize, make
         any negative comments or otherwise disparage or put in disrepute United
         HealthCare, or those associated with United HealthCare, in any way,
         whether orally, in writing or otherwise, directly or by implication in
         communication with any person, including but not limited to customers
         or agents of United HealthCare. This Section 4C shall survive the
         termination of this Agreement.

         D. NON-SOLICITATION. During (i) the term of this Agreement, (ii) the
         Severance Period or any period in which Executive receives severance
         compensation pursuant to United HealthCare' election under Section 4E,
         as applicable (iii) any period following the termination or expiration
         of this Agreement during which Executive remains employed by United
         HealthCare and (iv) for a period of one year after the last day of the
         latest of any period described in (i), (ii) or (iii), Executive shall
         not (y) directly or indirectly attempt to hire away any then-current
         employee of United HealthCare or a subsidiary of United HealthCare or
         to persuade any such employee to leave employment with United
         HealthCare, or (z) directly or indirectly solicit, divert, or take
         away, or attempt to solicit, divert, or take away, the business of any
         person, partnership, company or corporation with whom United HealthCare
         (including any subsidiary or affiliated company in which United
         HealthCare has a more than 20% equity interest) has established or is
         actively seeking to establish a business or customer relationship. This
         Section 4D shall survive the termination of this Agreement.


                                       -7-


         E. NON-COMPETITION. During (i) the term of this Agreement, (ii) the
         Severance Period or any period in which Executive receives severance
         compensation pursuant to United HealthCare' election under this Section
         4E, as applicable, and (iii) any period following the termination or
         expiration of this Agreement during which Executive remains employed by
         United HealthCare, Executive shall not, without United HealthCare's
         prior written consent, engage or participate, either individually or as
         an employee, consultant or principal, partner, agent, trustee, officer
         or director of a corporation, partnership or other business entity, in
         any business in which United HealthCare (including any subsidiary or
         affiliated company in which United HealthCare has more than a 20%
         equity interest) is engaged. If Executive terminates this Agreement,
         and as of such termination or within 90 days of such termination
         Executive also terminates Executive's employment by United HealthCare,
         United HealthCare may elect to have the provisions of this Section 4E
         be in effect for up to 24 months following the effective date of
         Executive's employment termination if, during the period up to 24
         months specified by United HealthCare, United HealthCare pays Executive
         severance compensation equal to biweekly payments of 1/26 of the
         Severance Compensation and the Cash Payment. United HealthCare must
         send written notice of such election within 10 days after it receives
         written notice of Executive's termination of employment. This Section
         4E shall survive the termination of this Agreement.

5. MISCELLANEOUS.

         A. ASSIGNMENT. This Agreement shall be binding upon and shall inure to
         the benefit of the parties and their successors and assigns, but may
         not be assigned by either party without the prior written consent of
         the other party, except that United HealthCare in its sole discretion
         may assign this Agreement to an entity controlled by United HealthCare
         at the time of the assignment. If United HealthCare subsequently loses
         or gives up control of the entity to which this Agreement is assigned,
         such entity shall become United HealthCare for all purposes under this
         Agreement, beginning on the date on which United HealthCare loses or
         gives up control of the entity. Any successor to United HealthCare
         shall be deemed to be United HealthCare for all purposes of this
         Agreement.

         B. NOTICES. All notices under this Agreement shall be in writing and
         shall be deemed to have been duly given if delivered by hand or mailed
         by registered or certified mail, return receipt requested, postage
         prepaid, to the party to receive the same at the address set forth
         below or at such other address as may have been furnished by proper
         notice.

United HealthCare:             300 Opus Center
                               9900 Bren Road East
                              Minnetonka, MN 55343
                              Attn: General Counsel
   Executive:


                                       -8-


         C. ENTIRE AGREEMENT. This Agreement contains the entire understanding
         of the parties with respect to its subject matter and may be amended or
         modified only by a subsequent written amendment executed by the
         parties. This Agreement replaces and supersedes any and all prior
         employment or employment related agreements and understandings,
         including any letters or memos which may have been construed as
         agreements, between the Executive and United HealthCare.

         D. CHOICE OF LAW. This Agreement shall be construed and interpreted
         under the applicable laws and decisions of the State of Minnesota.

         E. WAIVERS. No failure on the part of either party to exercise, and no
         delay in exercising, any right or remedy under this Agreement shall
         operate as a waiver; nor shall any single or partial exercise of any
         right or remedy preclude any other or further exercise of any right or
         remedy.

         F. ADEQUACY OF CONSIDERATION. Executive acknowledges and agrees that
         Executive has received adequate consideration from United HealthCare to
         enter into this Agreement.

         G. DISPUTE RESOLUTION AND REMEDIES. Any dispute arising between the
         parties relating to this Agreement or to Executive's employment by
         United HealthCare shall be resolved by binding arbitration pursuant to
         United HealthCare' Employment Arbitration Policy. The arbitrators shall
         not ignore or vary the terms of this Agreement and shall be bound by
         and apply controlling law. The parties acknowledge that Executive's
         failure to comply with the Confidential Information, Non-Solicitation
         and Non-Competition provisions of this Agreement will cause immediate
         and irreparable injury to United HealthCare and that therefore the
         arbitrators, or a court of competent jurisdiction if an arbitration
         panel cannot be immediately convened, will be empowered to provide
         injunctive relief, including temporary or preliminary relief, to
         restrain any such failure to comply.

         H. NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer or be
         deemed or construed to confer any rights or benefits upon any person
         other than the parties.

THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION THAT MAY BE ENFORCED BY
THE PARTIES.

IN WITNESS WHEREOF, this Agreement has been signed by the parties hereto as of
the Effective Date set forth above.

United HealthCare Services, Inc.             Executive

By /s/ Robert J. Backes                      /s/ Robert J. Sheehy
   ---------------------------------         ------------------------------

Its  Senior Vice President
     Human Resources
   ---------------------------------

                                       -9-

EX-13

RESULTS OF OPERATIONS

2001 FINANCIAL PERFORMANCE HIGHLIGHTS

2001 was a very strong year for UnitedHealth Group, as the company continued to
advance diversified business growth and productivity improvements. Financial
performance highlights include(1):

>     Record revenues of $23.5 billion, an 11% increase over 2000.

>     Record operating earnings of $1.6 billion, up 31% over 2000, with each
      business segment delivering strong advances in year-over-year revenue and
      operating earnings.

>     Record net earnings of $913 million and diluted net earnings per common
      share of $2.79, representing increases over 2000 of 30% and 33%,
      respectively.

>     Record operating cash flows of more than $1.8 billion, an increase of 21%
      over 2000.

>     Consolidated operating margin of 6.7%, up from 5.7% in 2000, driven by
      productivity gains, effective care facilitation efforts, and favorable mix
      shift from risk-based products to higher-margin, fee-based products.

>     Return on shareholders' equity of 24.5%, up from 19.0% in 2000.

(1)   Where applicable, 2000 results exclude the effects of separate
      dispositions of UnitedHealth Capital investments, further described in
      footnote 1 at the bottom of this page.

Following is a five-year summary of selected financial data:



                                                      For the Year Ended December 31,
(in millions, except per share data)  2001         2000        1999          1998        1997
- -----------------------------------------------------------------------------------------------
                                                                         
CONSOLIDATED OPERATING RESULTS
Revenues                             $23,454      $21,122     $19,562      $17,355      $11,794
Earnings (Loss) From Operations      $ 1,566      $ 1,200     $   943      $   (42)(3)  $   742
- -----------------------------------------------------------------------------------------------
Net Earnings (Loss)                  $   913      $   736(1)  $   568(2)   $  (166)     $   460
Net Earnings (Loss) Applicable
    to Common Shareholders           $   913      $   736     $   568      $  (214)(3)  $   431
- -----------------------------------------------------------------------------------------------
Basic Net Earnings (Loss)
    per Common Share                 $  2.92      $  2.27     $  1.63      $ (0.56)     $  1.15
Diluted Net Earnings (Loss)
    per Common Share                 $  2.79      $  2.19(1)  $  1.60(2)   $ (0.56)(3)  $  1.13
- -----------------------------------------------------------------------------------------------
Common Stock Dividends per Share     $  0.03      $  0.02     $  0.02      $  0.02      $  0.02
- -----------------------------------------------------------------------------------------------

CONSOLIDATED CASH FLOWS
    FROM OPERATING ACTIVITIES        $ 1,844      $ 1,521     $ 1,189      $ 1,071      $   683
- -----------------------------------------------------------------------------------------------

CONSOLIDATED FINANCIAL CONDITION
(As of December 31)
- -----------------------------------------------------------------------------------------------
Cash and Investments                 $ 5,698      $ 5,053     $ 4,719      $ 4,424      $ 4,041
Total Assets                         $12,486      $11,053     $10,273      $ 9,675      $ 7,623
Debt                                 $ 1,584      $ 1,209     $   991      $   708 (4)  $    --
Convertible Preferred Stock          $    --      $    --     $    --      $    -- (4)  $   500
Shareholders' Equity                 $ 3,891      $ 3,688     $ 3,863      $ 4,038      $ 4,534
Return on Shareholders' Equity          24.5%        19.0%       14.1%          na (3)     10.4%
- -----------------------------------------------------------------------------------------------


Results of Operations should be read together with the accompanying Consolidated
Financial Statements and Notes.

(1)   2000 results include a $14 million net permanent tax benefit related to
      the contribution of UnitedHealth Capital investments to the UnitedHealth
      Foundation and a $27 million gain ($17 million after tax) related to a
      separate disposition of UnitedHealth Capital investments. Excluding these
      items, Net Earnings and Diluted Net Earnings per Common Share were $705
      million and $2.10 per share for the year ended December 31, 2000.

(2)   1999 results include a net permanent tax benefit primarily related to the
      contribution of UnitedHealth Capital investments to the UnitedHealth
      Foundation. Excluding this benefit, Net Earnings and Diluted Net Earnings
      per Common Share were $563 million and $1.59 per share.

(3)   Excluding the operational realignment and other charges of $725 million,
      $175 million of charges related to contract losses associated with certain
      Medicare markets and other increases to commercial and Medicare medical
      costs payable estimates, and the $20 million convertible preferred stock
      redemption premium from 1998 results, Earnings From Operations and Net
      Earnings Applicable to Common Shareholders would have been $858 million
      and $509 million, or $1.31 Diluted Net Earnings per Common Share, and
      Return on Shareholders' Equity would have been 11.9%.

(4)   During 1998, we issued debt totaling $708 million and redeemed $500
      million of convertible preferred stock.

na -- not applicable


PAGE 22   UnitedHealth Group

2001 RESULTS COMPARED TO 2000 RESULTS

CONSOLIDATED FINANCIAL RESULTS

REVENUES

Revenues include premium revenue from risk-based (insured) products, fees from
management, administrative and consulting services, and investment and other
income.

    Consolidated revenues increased in 2001 to $23.5 billion. Strong and
balanced growth across all business segments was partially offset by the impact
of planned exits in 2000 from UnitedHealthcare's commercial businesses in the
Pacific Coast region, the withdrawal of its Medicare+Choice product offering
from targeted counties and the closure of Uniprise's Medicare fiscal
intermediary operations. Adjusted for the effects of these business and market
exits and excluding revenues from acquired businesses, consolidated revenues
increased approximately $3.0 billion, or 15%, over 2000. Following is a
discussion of 2001 consolidated revenue trends for each revenue component.

PREMIUM REVENUES Consolidated premium revenues in 2001 totaled $20.7 billion, an
increase of $1.8 billion, or 9%, compared with 2000. Adjusted for the effect of
business and market exits and excluding revenues from acquired businesses,
premium revenues increased 13% over 2000. This increase was primarily driven by
average net premium yield increases in excess of 13% on UnitedHealthcare's
renewing commercial insured business.

FEE REVENUES Fee revenues in 2001 totaled $2.5 billion, an increase of $526
million, or 27%, over 2000. The overall increase in fee revenues is primarily
the result of record growth of 20% in Uniprise's multi-site, large-employer
customer base, growth in UnitedHealthcare's fee-based business, and Ovations'
Pharmacy Services business that began operations in June 2001.

INVESTMENT AND OTHER INCOME Investment and other income in 2001 totaled $281
million, an increase of $49 million over 2000. Lower interest yields on
investments in 2001 compared with 2000 were largely offset by increased levels
of cash and fixed-income investments in 2001. Net realized capital gains in 2001
were $11 million, compared to net realized capital losses of $34 million in
2000.

MEDICAL COSTS

The combination of pricing, benefit designs and comprehensive care facilitation
efforts is reflected in the medical care ratio (medical costs as a percentage of
premium revenues).

    The consolidated medical care ratio decreased from 85.4% in 2000 to 85.3% in
2001. Excluding AARP business, the medical care ratio was 83.9% in both 2000 and
2001, as net premium yield increases were generally well matched with increases
in medical benefit costs.

    On an absolute dollar basis, medical costs increased $1.5 billion, or 9%,
over 2000. The increase was driven by medical cost inflation, increased
consumption patterns, benefit changes and product mix changes.


PAGE 23 UnitedHealth Group

OPERATING COSTS

Operating costs as a percentage of total revenues (the operating cost ratio) was
17.0% in 2001, compared with 16.7% in 2000. Changes in productivity and revenue
mix affect the operating cost ratio. For our fastest-growing businesses
(Uniprise, Specialized Care Services, Ingenix and Ovations Pharmacy Services),
most direct costs of revenue are included in operating costs, not medical costs.
Using a revenue mix comparable to 2000, the 2001 operating cost ratio would have
decreased 70 basis points to 16.0%. This decrease was principally driven by
productivity gains from process improvements, technology deployment and cost
management initiatives, primarily in the areas of claim processing and customer
billings and enrollment. Additionally, because our infrastructure can be scaled
efficiently, we have been able to grow revenues at a proportionately higher rate
than associated expenses.

    On an absolute dollar basis, operating costs increased by $459 million, or
13%, over 2000. This increase reflects additional costs to support product and
technology development initiatives and the 11% increase in consolidated revenues
in 2001, partially offset by productivity and technology improvements discussed
above.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization was $265 million in 2001 and $247 million in 2000.
This increase resulted primarily from higher levels of capital expenditures to
support business growth and technology enhancements, as well as the amortization
of goodwill and other intangible assets related to acquisitions.

INCOME TAXES

The 2000 income tax provision includes nonrecurring tax benefits primarily
related to the contribution of UnitedHealth Capital investments to the
UnitedHealth Foundation. Excluding nonrecurring tax benefits, our effective
income tax rate was 38.0% in 2001 and 37.5% in 2000.

BUSINESS SEGMENTS

The following summarizes the operating results of our business segments for the
years ended December 31 (in millions):



REVENUES                                                          Percent
                                            2001        2000      Change
- -------------------------------------------------------------------------
                                                         
Health Care Services                      $ 20,494    $ 18,696      10%
Uniprise                                     2,462       2,140      15%
Specialized Care Services                    1,254         974      29%
Ingenix                                        447         375      19%
Corporate and Eliminations                  (1,203)     (1,063)     nm
- -------------------------------------------------------------------------
  Consolidated Revenues                   $ 23,454    $ 21,122      11%
- -------------------------------------------------------------------------




EARNINGS FROM OPERATIONS                                         Percent
                                            2001        2000      Change
- -------------------------------------------------------------------------
                                                        
Health Care Services                      $    944    $    739      28%
Uniprise                                       374         289      29%
Specialized Care Services                      214         174      23%
Ingenix                                         48          32      50%
- -------------------------------------------------------------------------
  Total Operating Segments                   1,580       1,234      28%
Corporate                                      (14)        (34)     nm
- -------------------------------------------------------------------------
  Consolidated Earnings from Operations   $  1,566    $  1,200      31%
- -------------------------------------------------------------------------


nm -- not meaningful


PAGE 24  UnitedHealth Group

Health Care Services

The Health Care Services segment consists of the UnitedHealthcare and Ovations
businesses. UnitedHealthcare provides health and well-being services on behalf
of local employers and consumers nationwide. Ovations offers health and
well-being services for Americans age 50 and older.

    The Health Care Services segment posted record revenues of $20.5 billion in
2001, an increase of $1.8 billion, or 10%, over 2000. This increase resulted
from average net premium yield increases in excess of 13% on UnitedHealthcare's
renewing commercial insured business, partially offset by the impact of
UnitedHealthcare's targeted exits in 2000 from its commercial businesses in the
Pacific Coast region and the withdrawal of its Medicare+Choice product offering
from certain counties. Adjusted for the effects of these actions and excluding
revenues from acquired businesses, Health Care Services' revenues increased by
13% on a year-over-year basis.

    The Health Care Services segment had earnings from operations of $944
million in 2001, an increase of $205 million, or 28%, over 2000. This increase
resulted from revenue growth and stable gross margins on UnitedHealthcare's
commercial business and improved operating cost efficiencies from process
improvement, technology deployment and cost management initiatives. Health Care
Services' operating margin increased to 4.6% in 2001 from 4.0% in 2000, driven
by the productivity improvements described above and a positive shift in product
mix from risk-based products to higher-margin, fee-based products.

    UnitedHealthcare's commercial medical care ratio remained flat compared with
2000 at 84.1%, as net premium yield increases were generally well matched with
increases in overall medical benefit costs. UnitedHealthcare sets commercial
health plan premium rates based on anticipated benefit costs, including the
effects of medical cost inflation, consumption patterns, benefit changes,
product mix and market conditions.

    UnitedHealthcare's commercial individuals served increased by 135,000, or
2%, from December 31, 2000 to December 31, 2001, consisting of an increase of
380,000 in the number of individuals served with fee-based products, partially
offset by a 245,000 decrease in individuals served by risk-based products. The
decrease in individuals served by risk-based products was driven by a
combination of customers converting to self-funded, fee-based arrangements and
UnitedHealthcare's targeted withdrawal of its risk-based product offerings from
unprofitable arrangements with customers using multiple health benefit carriers.
The increase in fee-based customers was driven by customers converting from
risk-based products and new customer relationships established in 2001.

    UnitedHealthcare's year-over-year Medicare enrollment decreased 15% because
of actions taken to better position this program for long-term success.
Effective January 1, 2001, UnitedHealthcare withdrew its Medicare+Choice product
from targeted counties affecting 56,000 individuals. Annual revenues in 2000
from the Medicare markets exited as of January 1, 2001, were approximately $320
million.

         Effective January 1, 2002, UnitedHealthcare withdrew its
Medicare+Choice product from targeted counties affecting 57,000 individuals.
Annual revenues in 2001 from the Medicare markets exited as of January 1, 2002,
were approximately $370 million. These withdrawals are primarily in response to
insufficient Medicare program reimbursement rates in specific counties. These
actions will further reduce Medicare enrollment, but will preserve profit
margins in the long term. UnitedHealthcare will continue to evaluate Medicare
markets and, where necessary, take actions that may result in further
withdrawals of Medicare product offerings or reductions in membership, when and
as permitted by its contracts with the Centers for Medicare and Medicaid
Services (CMS), formerly known as the Health Care Financing Administration.


PAGE 25 UnitedHealth Group

    The following table summarizes individuals served by UnitedHealthcare, by
major market segment and funding arrangement, as of December 31 (in thousands):



                                                             2001    2000
- --------------------------------------------------------------------------
                                                              
Commercial
  Insured (risk-based)                                      5,250   5,495
  Fee-based                                                 2,305   1,925
- --------------------------------------------------------------------------
    Total Commercial                                        7,555   7,420
Medicare                                                      345     405
Medicaid                                                      640     550
- --------------------------------------------------------------------------
    Total UnitedHealthcare                                  8,540   8,375
- --------------------------------------------------------------------------



Uniprise

Uniprise provides health and well-being services, business-to-business
transaction processing services, consumer connectivity and technology support
for large employers and health plans. Uniprise revenues were $2.5 billion in
2001, up $322 million, or 15%, over 2000. This increase was driven primarily by
continued growth in Uniprise's large multi-site customer base, which had a 20%
increase in the number of individuals served. Uniprise served 8.0 million
individuals as of December 31, 2001, and 6.7 million individuals as of December
31, 2000. Uniprise's earnings from operations grew by $85 million, or 29%, over
2000 as a result of the increased revenues. The operating margin improved to
15.2% in 2001 from 13.5% in 2000. As revenues have increased, Uniprise has
expanded its operating margin by improving productivity through process
improvement initiatives and deployment of technology. Additionally, Uniprise's
infrastructure can be scaled efficiently, allowing their business to grow
revenues at a proportionately higher rate than associated expenses.

Specialized Care Services

Specialized Care Services is an expanding portfolio of health and well-being
companies, each serving a specialized market need with a unique blend of
benefits, networks, services and resources. Specialized Care Services had
revenues of $1.3 billion in 2001, an increase of $280 million, or 29%, over
2000. This increase was driven primarily by an increase in the number of
individuals served by United Behavioral Health, its mental health benefit
business, and an increase in specialized services purchased by customers
serviced by Uniprise and UnitedHealthcare. Earnings from operations reached $214
million in 2001, an increase of 23% over 2000. Specialized Care Services'
operating margin decreased from 17.9% in 2000 to 17.1% in 2001. The decrease in
operating margin is the result of a shifting product mix, with a larger
percentage of revenues coming from businesses with higher revenues per
individual served and lower percentage operating margins.

Ingenix

Ingenix is a leader in the field of health care data analysis and application,
serving pharmaceutical companies, health insurers and payers, health care
providers, large employers and governments. Revenues were $447 million in 2001,
an increase of $72 million, or 19%, over 2000. This increase reflects growth in
both the health information and pharmaceutical services businesses. Earnings
from operations were $48 million, up 50% over 2000. Operating margin increased
to 10.7% in 2001 from 8.5% in 2000, principally as a result of revenue growth
and improved productivity.

Corporate

Corporate includes investment income derived from cash and investments not
assigned to operating segments, companywide costs for certain core process
improvement initiatives, net expenses from charitable contributions to the
UnitedHealth Foundation and eliminations of intersegment transactions. The
decrease of $20 million in 2001 corporate expenses reflects lower companywide
process improvement expenses in 2001 compared to 2000, as certain process
improvement initiatives were completed in 2001.


PAGE 26 UnitedHealth Group

2000 RESULTS COMPARED TO 1999 RESULTS

CONSOLIDATED FINANCIAL RESULTS

Revenues

Consolidated revenues increased in 2000 to $21.1 billion. Balanced growth across
all business segments was partially offset by targeted pullbacks and exits from
certain geographic and Medicare markets. Adjusted for the effects of these
market transitions, consolidated revenues increased approximately $2.2 billion,
or 12%, over 1999. Following is a discussion of 2000 consolidated revenue trends
for each revenue component.

Premium Revenues Consolidated premium revenues in 2000 totaled $18.9 billion, an
increase of $1.4 billion, or 8%, compared with 1999. This increase was driven by
two primary factors: premium yield increases on UnitedHealthcare's renewing
commercial insured business and growth in the number of individuals served.
These increases were partially offset by withdrawals from certain geographic and
Medicare markets. Adjusted for the effect of these market withdrawals, premium
revenues increased 12% over 1999.

Fee Revenues Fee revenues in 2000 totaled $2.0 billion, an increase of $171
million, or 10%, over 1999. This increase resulted from record growth in
Uniprise's multi-site customer base, growth in UnitedHealthcare's fee-based
business, modest price increases, and acquisitions and growth in the Specialized
Care Services and Ingenix businesses.

Investment and Other Income Investment and other income in 2000 totaled $232
million, an increase of $13 million over 1999. Higher interest yields on
investments in 2000 compared with 1999 were largely offset by $34 million of net
realized capital losses in 2000. Net realized capital losses were $6 million in
1999.

Medical Costs

The consolidated medical care ratio decreased from 85.7% in 1999 to 85.4% in
2000. Excluding AARP business, on a year-over-year basis, the medical care ratio
decreased 30 basis points to 83.9%. Year-over-year medical care ratios decreased
because commercial net premium yield increases exceeded the increase in total
benefit costs.

    On an absolute dollar basis, medical costs increased $1.1 billion, or 7%,
over 1999. The increase was driven by growth in the number of individuals served
with insured products, medical cost inflation, increased consumption patterns,
benefit changes and product mix changes.

Operating Costs

The operating cost ratio was 16.7% in 2000, compared with 17.1% in 1999. Using a
revenue mix comparable to 1999, the 2000 operating cost ratio would have
decreased 80 basis points to 16.3%. This decrease was primarily driven by
productivity gains from process improvements, technology deployment and cost
management initiatives, and by further leveraging our fixed costs.

    On an absolute dollar basis, operating costs increased by $177 million, or
5%, over 1999. This increase reflects additional costs to support product and
technology development initiatives and the 8% increase in consolidated revenues
in 2000, partially offset by productivity and technology improvements discussed
above.

Depreciation and Amortization

Depreciation and amortization was $247 million in 2000 and $233 million in 1999.
This increase resulted primarily from higher levels of capital expenditures to
support business growth and technology enhancements, as well as amortization of
goodwill and other intangible assets related to acquisitions.


PAGE 27 UnitedHealth Group

Income Taxes

The 2000 income tax provision includes nonrecurring tax benefits primarily
related to the contribution of UnitedHealth Capital investments to the
UnitedHealth Foundation. Excluding nonrecurring tax benefits, our effective
income tax rate was 37.5% in 2000 and 37.0% in 1999.

BUSINESS SEGMENTS

The following summarizes the operating results of our business segments for the
years ended December 31 (in millions):



REVENUES                                                          Percent
                                             2000       1999       Change
- -------------------------------------------------------------------------
                                                         
Health Care Services                      $ 18,696    $ 17,581       6%
Uniprise                                     2,140       1,865      15%
Specialized Care Services                      974         726      34%
Ingenix                                        375         258      45%
Corporate and Eliminations                  (1,063)       (868)     nm
- -------------------------------------------------------------------------
  Consolidated Revenues                   $ 21,122    $ 19,562       8%
- -------------------------------------------------------------------------




EARNINGS FROM OPERATIONS                                          Percent
                                              2000        1999     Change
- -------------------------------------------------------------------------
                                                         
Health Care Services                      $    739    $    578      28%
Uniprise                                       289         222      30%
Specialized Care Services                      174         128      36%
Ingenix                                         32          25      28%
- -------------------------------------------------------------------------
  Total Operating Segments                   1,234         953      29%
Corporate                                      (34)        (10)     nm
- -------------------------------------------------------------------------
  Consolidated Earnings from Operations   $  1,200    $    943      27%
- -------------------------------------------------------------------------


nm -- not meaningful

HEALTH CARE SERVICES

The Health Care Services segment posted revenues of $18.7 billion in 2000, an
increase of $1.1 billion, or 6%, over 1999. This increase was primarily due to
premium yield increases on UnitedHealthcare's renewing commercial insured
business and growth of approximately 7% in the number of individuals served in
continuing markets, partially offset by targeted pullbacks in certain geographic
and Medicare markets. Adjusted for the effects of these market changes, Health
Care Services' revenues increased by 10% on a year-over-year basis.

    The Health Care Services segment contributed earnings from operations of
$739 million in 2000, an increase of $161 million, or 28%, over 1999. This
increase was primarily the result of improved margins on UnitedHealthcare's
commercial business and lower operating costs as a percentage of revenues,
driven by process improvement, technology deployment and cost management
initiatives. Health Care Services' operating margin increased to 4.0% in 2000
from 3.3% in 1999.

    UnitedHealthcare's commercial medical care ratio improved to 84.1% in 2000
from 84.6% in 1999, as net premium yield increases exceeded increases in medical
costs.


PAGE 28   UnitedHealth Group

    The following table summarizes individuals served by UnitedHealthcare, by
major market segment and funding arrangement, as of December 31 (in thousands):



                                                             2000     1999
- --------------------------------------------------------------------------
                                                               
Commercial
  Insured (risk-based)                                       5,495   5,150
  Fee-based                                                  1,925   1,745
- --------------------------------------------------------------------------
    Total Commercial                                         7,420   6,895(1)
  Medicare                                                     405     435
  Medicaid                                                     550     480
- --------------------------------------------------------------------------
    Total UnitedHealthcare                                   8,375   7,810
- --------------------------------------------------------------------------


(1) Excludes individuals served through UnitedHealthcare platforms located in
Puerto Rico and Pacific Coast regions. As of December 31, 2000, UnitedHealthcare
had substantially transitioned from these markets. Including these markets,
commercial individuals served at December 31, 1999, were 5,650 for insured
products and 1,885 for fee-based products.

UNIPRISE

Uniprise had revenues of $2.1 billion in 2000, an increase of $275 million, or
15%, over 1999. This increase was driven primarily by continued growth in
Uniprise's large multi-site customer base, which had an 11% increase in
individuals served, as well as changes in funding arrangements selected by
certain customers and price increases on fee-based business. Uniprise served 6.7
million and 6.0 million individuals as of December 31, 2000 and 1999,
respectively. Uniprise's earnings from operations grew by $67 million, or 30%,
over 1999 as a result of increased revenues. Operating margin improved to 13.5%
in 2000 from 11.9% in 1999. Uniprise has expanded its operating margin by
improving productivity through process improvement initiatives, increased
deployment of technology and further leveraging of fixed costs.

SPECIALIZED CARE SERVICES

Specialized Care Services' revenues were $974 million in 2000, an increase of
$248 million, or 34%, over 1999. This increase was driven primarily by an
increase in the number of individuals served by United Behavioral Health, and
the acquisitions of Dental Benefit Providers, Inc. in June 1999 and National
Benefit Resources, Inc. in November 1999. Earnings from operations of $174
million increased by 36% compared with 1999, in line with 2000 revenue growth.
Specialized Care Services' operating margin improved from 17.6% in 1999 to 17.9%
in 2000.

INGENIX

Ingenix had revenues of $375 million in 2000, an increase of $117 million, or
45%, over 1999. This increase was driven by organic growth of $54 million and
acquisitions made in 1999 that expanded the company's clinical research and
development, clinical marketing and health information services. Earnings from
operations of $32 million increased 28% over 1999. Operating margin decreased to
8.5% in 2000 from 9.7% in 1999, principally as a result of increased goodwill
amortization expense associated with acquisitions.

CORPORATE

The decrease of $24 million in 2000 earnings reflects a decline in the level of
unassigned cash and investments and associated investment income, primarily due
to share repurchases and incremental process improvement costs in 2000.


PAGE 29   UnitedHealth Group

OPERATIONAL REALIGNMENT AND OTHER CHARGES

In conjunction with a comprehensive operational realignment initiated in 1998,
we developed and approved an implementation plan (the Plan). We recognized
corresponding charges to operations of $725 million in the second quarter of
1998, which reflected the estimated costs to be incurred under the Plan. The
charges included costs associated with asset impairments; employee terminations;
disposing of or discontinuing business units, product lines and contracts; and
consolidating and eliminating certain claim processing and customer service
operations and associated real estate obligations.

    We completed our operational realignment plan in 2001. Actual costs incurred
executing the Plan exceeded estimates by approximately $4 million, which has
been included in 2001 operating costs in the Consolidated Statements of
Operations. These excess costs were incurred in the fourth quarter of 2001.
Activities associated with the Plan resulted in the reduction of approximately
5,100 positions, affecting approximately 5,800 people.

    As of December 31, 2000, we had completed all planned business dispositions
and market exits pursuant to the Plan. Accordingly, our 2001 financial
statements do not include the operating results of exited businesses or markets.
Our Consolidated Statements of Operations include results for businesses
disposed of and markets exited in connection with our operational realignment as
follows: $312 million in revenues and $9 million in earnings from operations in
2000, and $689 million in revenues and $41 million of losses from operations in
1999. These amounts do not include operating results from the counties where
UnitedHealthcare withdrew its Medicare product offerings effective January 1,
2001, and January 1, 2000. Annual revenues for 2000 from the counties exited
effective January 1, 2001, were approximately $320 million. Annual revenues for
1999 from the counties exited effective January 1, 2000, were approximately $230
million.

    The operational realignment and other charges did not cover certain aspects
of the Plan, including new information systems, data conversions, process
re-engineering, temporary duplicate staffing costs as we consolidated processing
and service centers, and employee relocation and training. These costs were
expensed as incurred or capitalized, as appropriate. During 2001, 2000 and 1999,
we incurred expenses of approximately $20 million, $57 million and $52 million,
respectively, related to these activities.

FINANCIAL CONDITION AND LIQUIDITY AT DECEMBER 31, 2001

LIQUIDITY

We manage our cash, investments and capital structure so we are able to meet the
short- and long-term obligations of our business while maintaining financial
flexibility and liquidity. We forecast, analyze and monitor our cash flows to
enable prudent investment and financing within the overall constraints of our
financial strategy, such as our self-imposed limit of 30% on our
debt-to-total-capital ratio (calculated as the sum of commercial paper and debt
divided by the sum of commercial paper, debt and shareholders' equity).

    Much of the assets held by our regulated subsidiaries are in the form of
cash, cash equivalents and investments. After considering expected cash flows
from operating activities, we generally invest monies of regulated subsidiaries
that exceed our near-term obligations in longer term marketable debt securities,
to improve our overall income return. Factors we consider in making these
investment decisions include our board of directors' approved policy, regulatory
limitations, return objectives, tax implications, risk tolerance and maturity
dates. Even our long-term investments are available for sale to meet liquidity
and other needs. Monies in excess of the capital needs of our regulated entities
are paid to their non-regulated parent companies, typically in the form of
dividends, for general corporate use, when and as permitted by applicable
regulations.


PAGE 30   UnitedHealth Group

    Our non-regulated businesses also generate cash from operations.
Additionally, we issue long-term debt and commercial paper with staggered
maturity dates and have available credit facilities. These additional sources of
liquidity allow us to maintain further operating and financial flexibility.
Because of this flexibility, we typically maintain low cash and investment
balances in our non-regulated companies. Cash in these entities is generally
used to reinvest in our businesses in the form of capital expenditures, to
expand the depth and breadth of our services through business acquisitions, and
to repurchase shares of our common stock.

    Cash generated from operating activities, our primary source of liquidity,
is principally attributable to net earnings, excluding depreciation and
amortization. As such, any future decline in our profitability would likely have
a negative impact on our liquidity. The availability of financing, in the form
of debt or equity, is influenced by many factors including our profitability,
operating cash flows, debt levels, debt ratings, contractual restrictions,
regulatory requirements and market conditions. We believe that our strategies
and actions toward maintaining financial flexibility mitigate much of this risk.

CASH AND INVESTMENTS

During 2001, we generated cash from operations of more than $1.8 billion, an
increase of $323 million, or 21%, over 2000. The increase in operating cash
flows primarily resulted from an increase of $195 million in net income
excluding depreciation and amortization expense and working capital improvements
of approximately $111 million.

    We maintained a strong financial condition and liquidity position, with cash
and investments of $5.7 billion at December 31, 2001. Total cash and investments
increased by $645 million since December 31, 2000, primarily resulting from
strong cash flows from operations partially offset by common stock repurchases.

    As further described under "Regulatory Capital and Dividend Restrictions,"
many of our subsidiaries are subject to various government regulations that
restrict the timing and amount of dividends and other distributions that may be
paid to their parent companies. At December 31, 2001, approximately $660 million
of our $5.7 billion of cash and investments was held by non-regulated
subsidiaries. Of this amount, approximately $260 million was segregated for
future regulatory capital needs and $230 million was available for general
corporate use, including acquisitions and share repurchases. The remaining $170
million consists primarily of public and non-public equity securities held by
UnitedHealth Capital, our investment capital business.

FINANCING AND INVESTING ACTIVITIES

We use commercial paper and debt to maintain adequate operating and financial
flexibility. As of December 31, 2001 and 2000, we had commercial paper and debt
outstanding of $1.6 billion and $1.2 billion, respectively. Proceeds from the
net increase of $375 million in total commercial paper and debt will be used for
general corporate purposes, which may include working capital, business
acquisitions, capital expenditures and share repurchases.

    Our debt-to-total-capital ratio was 28.9% and 24.7% as of December 31, 2001
and 2000, respectively. We expect to maintain our debt-to-total-capital ratio
between 25% and 30%. Within this range, we believe our cost of capital and
return on shareholders' equity are optimized, while maintaining a prudent level
of leverage and liquidity.
    Commercial paper outstanding at December 31, 2001, totaled $684 million,
with interest rates ranging from 1.9% to 2.7%. In November 2001, we issued $100
million of floating-rate notes due November 2003 and $150 million of
floating-rate notes due November 2004. The interest rates on the notes are reset
quarterly to


PAGE 31 UnitedHealth Group

the three-month LIBOR (London Interbank Offered Rate) plus 0.3% for the notes
due November 2003 and to the three-month LIBOR plus 0.6% for the notes due
November 2004. As of December 31, 2001, the applicable rates on the notes were
2.4% and 2.7%, respectively. A portion of the proceeds from these borrowings was
used to repay $150 million of floating-rate notes that matured in November 2001.

    In January 2002, we issued $400 million of 5.2% fixed-rate notes due January
2007. Proceeds from this borrowing will be used to repay commercial paper and
for general corporate purposes, including working capital, capital expenditures,
business acquisitions and share repurchases. When we issued these notes, we
entered into interest rate swap agreements to convert a portion of our interest
rate exposure from a fixed rate to a variable rate. The interest rate swap
agreements have an aggregate notional amount of $200 million maturing January
2007. The variable rates approximate the six-month LIBOR and are reset on a
semiannual basis.

    We have credit arrangements for $900 million that support our commercial
paper program. These credit arrangements include a $450 million revolving
facility that expires in July 2005, and a $450 million, 364-day facility that
expires in July 2002. We also have the capacity to issue approximately $200
million of extendible commercial notes (ECNs). As of December 31, 2001 and 2000,
we had no amounts outstanding under our credit facilities or ECNs.

    Our debt arrangements and credit facilities contain various covenants, the
most restrictive of which require us to maintain a debt-to-total-capital ratio
below 45% and to exceed specified minimum interest coverage levels. We are in
compliance with the requirements of all debt covenants.

    Our senior debt is rated "A" by Standard & Poor's (S&P) and Fitch, and "A3"
by Moody's. Our commercial paper and ECN programs are rated "A-1" by S&P, "F-1"
by Fitch, and "P-2" by Moody's. Consistent with our intention of maintaining our
senior debt ratings in the "A" range, we intend to maintain our
debt-to-total-capital ratio at 30% or less. A significant downgrade in our debt
and commercial paper ratings could adversely affect our borrowing capacity and
costs.

    The remaining issuing capacity of all securities covered by our shelf
registration statement for common stock, preferred stock, debt securities and
other securities is $450 million, after giving effect to the $400 million
fixed-rate notes issued in January 2002. We may publicly offer such securities
from time to time at prices and terms to be determined at the time of offering.

    Under our board of directors' authorization, we maintain a common stock
repurchase program. Repurchases may be made from time to time at prevailing
prices, subject to certain restrictions on volume, pricing and timing. During
2001, we repurchased 19.6 million shares at an aggregate cost of approximately
$1.1 billion. Through December 31, 2001, we had repurchased approximately 112.5
million shares for an aggregate cost of $3.7 billion since the program began in
November 1997. As of December 31, 2001, we had board of directors' authorization
to purchase up to an additional 8.8 million shares of our common stock.
In February 2002, the board of directors authorized us to repurchase up to an
additional 30 million shares of common stock under the program.

    As part of our share repurchase activities, we have entered into agreements
with an independent third party to purchase shares of our common stock, where
the number of shares we purchase, if any, depends upon market conditions and
other contractual terms. As of December 31, 2001, we had conditional agreements
to purchase up to 6.1 million shares of our common stock at various times and
prices through 2003, at an average price of approximately $58 per share.

    During 2001 and 2000, we invested $425 million and $245 million,
respectively, in property, equipment and capitalized software. These investments
were made to support business growth, operational efficiency, service
improvements and technology enhancements.


PAGE 32 UnitedHealth Group

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

We have various contractual obligations and commercial commitments to make
future payments including debt agreements, lease obligations, stock repurchase
contracts and data center service agreements. The following table summarizes our
future obligations under these contracts due by period as of December 31, 2001
(in millions):



                                   2002    2003 to 2004    2005 to 2006  Thereafter  Total
- ------------------------------------------------------------------------------------------
                                                                     
Debt and Commercial Paper(1)      $  684      $  500          $400          $ --    $1,584
Operating Leases                      99         167           128           224       618
Data Center Service Agreements       206         443           263            --       912
Stock Repurchase Contracts(2)        217         138            --            --       355
- ------------------------------------------------------------------------------------------
  Total Contractual Obligations   $1,206      $1,248          $791           $224   $3,469
- ------------------------------------------------------------------------------------------


(1) Debt payments could be accelerated upon violation of debt covenants. We
    believe the likelihood of a debt covenant violation is remote.

(2) Reflects maximum potential purchases under stock repurchase contracts. In
    the event of certain termination events, including a default on our debt or
    credit agreements or a downgrade of our debt ratings below investment grade,
    we could be required to immediately settle our remaining obligations under
    the contracts. We may elect to settle the contracts by issuing common stock
    in lieu of cash. We believe the likelihood of a debt covenant violation or a
    downgrade of our debt rating below investment grade is remote.

Currently, we do not have any other material definitive commitments that require
cash resources; however, we continually evaluate opportunities to expand our
operations. This includes internal development of new products and programs and
may include acquisitions.

AARP

In January 1998, we began providing services under a 10-year contract to provide
insurance products and services to members of AARP. Under the terms of the
contract, we are compensated for claim administration and other services as well
as for assuming underwriting risk. We are also engaged in product development
activities to complement the insurance offerings under this program. Premium
revenues from our portion of the AARP insurance offerings were approximately
$3.5 billion during 2001, 2000 and 1999.

    The underwriting gains or losses related to the AARP business are recorded
as an increase or decrease to a rate stabilization fund (RSF), which is reported
in Other Policy Liabilities in the accompanying Consolidated Balance Sheets. The
company is at risk for underwriting losses to the extent cumulative net losses
exceed the balance in the RSF. We may recover RSF deficits, if any, from gains
in future contract periods. We believe the RSF balance is sufficient to cover
potential future underwriting or other risks associated with the contract.

    The effects of changes in balance sheet amounts associated with the AARP
program accrue to AARP policyholders through the RSF balance. Accordingly, we do
not include the effect of such changes in our Consolidated Statements of Cash
Flows.









PAGE  33 UnitedHealth Group

REGULATORY CAPITAL AND DIVIDEND RESTRICTIONS

We conduct our operations through our wholly-owned subsidiaries. These companies
are subject to standards established by the National Association of Insurance
Commissioners (NAIC) that, among other things, require them to maintain
specified levels of statutory capital, as defined by each state, and restrict
the timing and amount of dividends and other distributions that may be paid to
their parent companies. Generally, the amount of dividend distributions that may
be paid by a regulated subsidiary, without prior approval by state regulatory
authorities, is limited based on the entity's level of statutory net income and
statutory capital and surplus. The agencies that assess our creditworthiness
also consider capital adequacy levels when establishing our debt ratings.
Consistent with our intention of maintaining our senior debt ratings in the "A"
range, we maintain an aggregate statutory capital and surplus level for our
regulated subsidiaries that is significantly higher than the level regulators
require. As of December 31, 2001, our regulated subsidiaries had aggregate
statutory capital and surplus of approximately $2.0 billion, more than $1.1
billion above the $850 million of required aggregate capital and surplus.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Critical accounting policies are those policies that require the application of
management's most challenging, subjective or complex judgments, often as a
result of the need to make estimates about the effect of matters that are
inherently uncertain and may change in subsequent periods. Critical accounting
policies involve judgments and uncertainties that are sufficiently sensitive to
result in materially different results under different assumptions and
conditions. We believe that our most critical accounting policies are those
described below. For a detailed discussion of these and other accounting
policies, see Note 2 to the Consolidated Financial Statements.

MEDICAL COSTS

A substantial portion of our medical costs payable balance is based on
estimates. This balance includes estimates for the costs of health care services
people have received, but for which claims have not yet been submitted, and
estimates for the costs of claims we have received but have not yet processed.
We develop medical costs payable estimates using actuarial methods based upon
historical claim submission and payment data, cost trends, customer and product
mix, seasonality, utilization of health care services, contracted service rates
and other relevant factors. The estimates may change as actuarial methods change
or as underlying facts upon which estimates are based change. We did not change
actuarial methods during 2001, 2000 and 1999.

    Management believes the amount of medical costs payable is adequate to cover
the company's liability for unpaid claims as of December 31, 2001; however,
actual claim payments may differ from established estimates. Assuming a
hypothetical 1% difference between our December 31, 2001 estimates of medical
costs payable and actual costs payable, 2001 earnings from operations would
increase or decrease by approximately $20 million and basic and diluted net
earnings per common share would increase or decrease by approximately $0.04 per
share. Adjustments to medical costs payable estimates are reflected in operating
results in the period in which the change in estimate is identified.


PAGE 34 UnitedHealth Group

REVENUES

Our revenue is principally derived from health care insurance premiums. Premium
revenues are recognized in the period enrolled members are entitled to receive
health care services. Customers are typically billed monthly at a contracted
rate per enrolled member multiplied by the number of members eligible to receive
services, as recorded in our records. Because employer groups generally provide
us with changes to their eligible member population one month in arrears, each
billing includes an adjustment for prior month changes in member status that
were not reflected in our billing. We estimate the amount of future adjustments
and adjust the current period's revenues and accounts receivable accordingly.
Our estimates are based on historical trends, premiums billed, the level of
contract renewal activity, and other relevant information. We also estimate the
amount of uncollectible receivables each period and record valuation allowances
based on historical collection rates, the age of unpaid amounts, and information
about the creditworthiness of the customers. Estimates of revenue adjustments
and uncollectible accounts receivable are revised each period, and changes are
recorded in the period they become known.

INVESTMENTS

As of December 31, 2001, we had approximately $4.2 billion of investments,
primarily held in marketable debt securities. Our investments are principally
classified as available for sale and are recorded at their fair values as of the
date reported. Unrealized investment gains and losses are excluded from earnings
and reported as a separate component in shareholders' equity. We continually
monitor the difference between the cost and fair value of our investments. If
any of our investments experience a decline in fair value that we believe is
other than temporary, we record a realized loss in our Consolidated Statements
of Operations. Management judgment is involved in evaluating whether a decline
in an investment's fair value is other than temporary. The discovery of new
information and the passage of time can change these judgments. Revisions of
impairment judgments are made when new information becomes known, and any
resulting impairment adjustments are made at that time. We manage our investment
portfolio to limit our exposure to any one issuer or industry, and largely limit
our investments to U.S. Government and Agency securities, state and municipal
securities, and corporate debt obligations that are investment grade.

LONG-LIVED ASSETS

As of December 31, 2001 and 2000, we had long-lived assets, including goodwill,
other intangible assets, and property, equipment and capitalized software of
$3.7 billion and $3.2 billion, respectively. We review these assets for events
and changes in circumstances that would indicate we might not recover their
carrying value. In assessing the recoverability of our long-lived assets, we
must make assumptions regarding estimated future cash flows and other factors to
determine the fair value of the respective assets. If these estimates or their
related assumptions change in the future, we may be required to record
impairment charges for these assets.

CONTINGENT LIABILITIES

Because of the nature of our businesses, we are routinely involved in various
disputes, legal proceedings and governmental audits and investigations. We
record liabilities for our estimate of probable costs resulting from these
matters. Our estimates are developed in consultation with outside legal counsel
and are based upon an analysis of potential results, assuming a combination of
litigation and settlement strategies and considering our insurance coverages for
such matters. We do not believe any matters currently threatened or pending will
have a material adverse effect on our consolidated financial position. It is
possible, however, that future results of operations for any particular
quarterly or annual period could be materially affected by changes in our
assumptions or the effectiveness of our strategies related to these proceedings.


PAGE 35 UnitedHealth Group

INFLATION

The national health care cost inflation rate significantly exceeds the general
inflation rate. We use various strategies to lessen the effects of health care
cost inflation. This includes setting commercial premiums based on anticipated
health care costs and coordinating care with physicians and other health care
providers. Through contracts with physicians and other health care providers,
our health plans emphasize preventive health care, appropriate use of specialty
and hospital services, education and closing gaps in care.

    We believe our strategies to mitigate the impact of health care cost
inflation on our operating results have been and will continue to be successful.
However, other factors including competitive pressures, new health care and
pharmaceutical product introductions, demands from physicians and other health
care providers and consumers, and applicable regulations may affect our ability
to control the impact of health care cost inflation. Changes in medical cost
trends that were not anticipated in establishing premium rates, because of the
narrow operating margins of our insurance products, can create significant
changes in our financial results.

LEGAL MATTERS

Because of the nature of our businesses, we are routinely party to a variety of
legal actions related to the design, management and offerings of our services.
These matters include: claims relating to health care benefits coverage; medical
malpractice actions; allegations of anti-competitive and unfair business
activities; disputes over compensation and termination of contracts including
those with physicians and other health care providers; disputes related to our
administrative services, including actions alleging claim administration errors
and failure to disclose rate discounts and other fee and rebate arrangements;
disputes over benefit copayment calculations; claims related to disclosure of
certain business practices; and claims relating to customer audits and contract
performance.

    In 1999, a number of class action lawsuits were filed against us and
virtually all major entities in the health benefits business. The suits are
purported class actions on behalf of certain customers and physicians for
alleged breaches of federal statutes, including the Employee Retirement Income
Security Act of 1974, as amended (ERISA), and the Racketeer Influenced Corrupt
Organization Act (RICO). Although the results of pending litigation are always
uncertain, we do not believe the results of any such actions, including those
described above, currently threatened or pending will, individually or in
aggregate, have a material adverse effect on our results of operations or
financial position.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of changes in value of a financial instrument
caused by changes in interest rates and equity prices.

    Approximately $5.5 billion of our cash and investments at December 31, 2001,
was invested in fixed income securities. We manage our investment portfolio
within risk parameters approved by our board of directors; however, our fixed
income securities are subject to the effects of market fluctuations in interest
rates. Assuming a hypothetical and immediate 1% increase or decrease in interest
rates applicable to our fixed income portfolio at December 31, 2001, the fair
value of our fixed income investments would decrease or increase by
approximately $160 million.

    At December 31, 2001, we had approximately $170 million of equity
investments in various public and non-public companies concentrated in the areas
of health care delivery and related information technologies. Market conditions
that affect the value of health care or technology stocks will likewise impact
the value of our equity portfolio.


PAGE 36 UnitedHealth Group

CONCENTRATIONS OF CREDIT RISK

Investments in financial instruments such as marketable securities and accounts
receivable may subject UnitedHealth Group to concentrations of credit risk. Our
investments in marketable securities are managed under an investment policy
authorized by our board of directors. This policy limits the amounts that may be
invested in any one issuer and generally limits our investments to U.S.
Government, Agency and municipal securities and corporate debt obligations that
are investment grade. Concentrations of credit risk with respect to accounts
receivable are limited to the large number of employer groups that constitute
our customer base. As of December 31, 2001, there were no significant
concentrations of credit risk.

CAUTIONARY STATEMENT REGARDING "FORWARD-LOOKING" STATEMENTS

The statements contained in Results of Operations and other sections of this
annual report to shareholders, include forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 (PSLRA). When
used in this report, the words or phrases "believes," "anticipates," "intends,"
"will likely result," "estimates," "projects" or similar expressions are
intended to identify such forward-looking statements. Any of these
forward-looking statements involve risks and uncertainties that may cause the
company's actual results to differ materially from the results discussed in the
forward-looking statements. Statements that are not strictly historical are
"forward-looking" and unknown risks may cause actual results and corporate
developments to differ materially from those expected. Except to the extent
otherwise required by federal securities laws, in making these statements we are
not undertaking to address or update each statement in future filings or
communications regarding our business or results, and are not undertaking to
address how any of these factors may have caused results to differ from
discussions or information contained in previous filings or communications. In
addition, any of the matters discussed in this annual report may have affected
our past, as well as current, forward-looking statements about future results.
Any or all forward-looking statements in this report and in any other public
statements we make may turn out to be inaccurate or false. They can be affected
by inaccurate assumptions we might make or by known or unknown risks and
uncertainties.

    Many factors discussed below will be important in determining future
results. Consequently, no forward-looking statement can be guaranteed. Actual
future results may vary materially from those expressed in our prior
communications. Factors that could cause results and developments to differ
materially from expectations include, without limitation, (a) increases in
medical costs that are higher than we anticipated in establishing our premium
rates, including increased use of or costs of medical services; (b) increases in
costs associated with increased litigation, legislative activity and government
regulation and review of our industry, including costs associated with
compliance with proposed legislation related to the Patients' Bill of Rights,
e-commerce activities and consumer privacy issues; (c) heightened competition as
a result of new entrants into our market, mergers and acquisitions of health
care companies and suppliers, and expansion of physician or practice management
companies; (d) events that may negatively affect our contract with AARP,
including any failure on our part to service AARP customers in an effective
manner and any adverse events that directly affect AARP or its business
partners; (e) medical cost increases or benefit changes associated with our
remaining Medicare+Choice operations; (f) significant deterioration in customer
retention; and (g) significant deterioration in economic conditions, including
the effects of acts of terrorism, particularly bioterrorism. A further list and
description of these risks, uncertainties and other matters can be found in the
company's annual report on Form 10-K for the year ended December 31, 2001, and
in its periodic reports on Forms 10-Q and 8-K (if any).


PAGE 37   UnitedHealth Group

CONSOLIDATED STATEMENTS OF OPERATIONS



                                                            For the Year Ended December 31,
(in millions, except per share data)                          2001        2000        1999
- --------------------------------------------------------------------------------------------
                                                                           
REVENUES
  Premiums                                                  $ 20,683    $ 18,926    $ 17,550
  Fees                                                         2,490       1,964       1,793
  Investment and Other Income                                    281         232         219
- --------------------------------------------------------------------------------------------
  Total Revenues                                              23,454      21,122      19,562
- --------------------------------------------------------------------------------------------

MEDICAL AND OPERATING COSTS
  Medical Costs                                               17,644      16,155      15,043
  Operating Costs                                              3,979       3,520       3,343
  Depreciation and Amortization                                  265         247         233
- --------------------------------------------------------------------------------------------
  Total Medical and Operating Costs                           21,888      19,922      18,619
- --------------------------------------------------------------------------------------------

EARNINGS FROM OPERATIONS                                       1,566       1,200         943
  Gain on Disposition of UnitedHealth Capital Investments         --          27          --
  Interest Expense
                                                                 (94)        (72)        (49)
- --------------------------------------------------------------------------------------------
EARNINGS BEFORE INCOME TAXES                                   1,472       1,155         894
  Provision for Income Taxes                                    (559)       (419)       (326)
- --------------------------------------------------------------------------------------------

NET EARNINGS                                                $    913    $    736    $    568
- --------------------------------------------------------------------------------------------

BASIC NET EARNINGS PER COMMON SHARE                         $   2.92    $   2.27    $   1.63
- --------------------------------------------------------------------------------------------

DILUTED NET EARNINGS PER COMMON SHARE                       $   2.79    $   2.19    $   1.60
- --------------------------------------------------------------------------------------------

BASIC WEIGHTED-AVERAGE NUMBER OF COMMON SHARES
  OUTSTANDING                                                  312.4       324.2       348.2
DILUTIVE EFFECT OF OUTSTANDING STOCK OPTIONS                    14.4        12.3         6.8
- --------------------------------------------------------------------------------------------

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
  ASSUMING DILUTION                                            326.8       336.5       355.0
- --------------------------------------------------------------------------------------------


See notes to consolidated financial statements.


PAGE 38   UnitedHealth Group

CONSOLIDATED BALANCE SHEETS



                                                                   As of December 31,
(in millions, except share and per share data)                      2001      2000
- ------------------------------------------------------------------------------------
                                                                       
ASSETS
  Current Assets
    Cash and Cash Equivalents                                      $ 1,540   $ 1,419
    Short-Term Investments                                             270       200
    Accounts Receivable, net of allowances of $127 and $118            856       867
    Assets Under Management                                          1,903     1,646
    Deferred Income Taxes                                              316       235
    Other Current Assets                                                61        38
- ------------------------------------------------------------------------------------
      Total Current Assets                                           4,946     4,405
  Long-Term Investments                                              3,888     3,434
  Property, Equipment and Capitalized Software, net of accumulated
    depreciation and amortization of $670 and $599                     847       557
  Goodwill and Other Intangible Assets, net of accumulated
    amortization of $500 and $415                                    2,805     2,657
- ------------------------------------------------------------------------------------
      TOTAL ASSETS                                                 $12,486   $11,053
- ------------------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
  Current Liabilities
    Medical Costs Payable                                          $ 3,460   $ 3,266
    Accounts Payable and Accrued Liabilities                         1,209     1,050
    Other Policy Liabilities                                         1,595     1,216
    Commercial Paper and Current Maturities of Long-Term Debt          684       559
    Unearned Premiums                                                  543       479
- ------------------------------------------------------------------------------------
      Total Current Liabilities                                      7,491     6,570
  Long-Term Debt, less current maturities                              900       650
  Deferred Income Taxes and Other Liabilities                          204       145
  Commitments and Contingencies (Note 11)
- ------------------------------------------------------------------------------------
  Shareholders' Equity
    Common Stock, $0.01 par value - 1,500,000,000 shares authorized;
      308,626,000 and 317,235,000 shares outstanding                     3         3
    Additional Paid-In Capital                                          39        --
    Retained Earnings                                                3,805     3,595
    Accumulated Other Comprehensive Income:
      Net Unrealized Gains on Investments, net of tax effects           44        90
- ------------------------------------------------------------------------------------
      TOTAL SHAREHOLDERS' EQUITY                                     3,891     3,688
- ------------------------------------------------------------------------------------
      TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                   $12,486   $11,053
- ------------------------------------------------------------------------------------


See notes to consolidated financial statements


PAGE 39   UnitedHealth Group

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY



                                                                     Additional
                                                    Common Stock       Paid-In      Retained
(in millions)                                     Shares    Amount     Capital      Earnings
- --------------------------------------------------------------------------------------------
                                                                           
BALANCE AT DECEMBER 31, 1998                        368       $ 4      $ 1,107      $ 2,883
  Issuances of Common Stock,
    and related tax benefits                          6        --          125           --
  Common Stock Repurchases                          (39)       (1)        (982)          --
  Comprehensive Income
Net Earnings                                         --        --           --          568
    Other Comprehensive Income Adjustments
      Change in Net Unrealized Gains
            on Investments, net of tax effects       --        --           --           --
               Comprehensive Income                  --        --           --           --
  Common Stock Dividend                              --        --           --           (6)
- --------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1999                        335         3          250        3,445
  Issuances of Common Stock,
    and related tax benefits                         13        --          349           --
  Common Stock Repurchases                          (31)       --         (599)        (581)
  Comprehensive Income
Net Earnings                                         --        --           --          736
    Other Comprehensive Income Adjustments
      Change in Net Unrealized Gains
            on Investments, net of tax effects       --        --           --           --
               Comprehensive Income                  --        --           --           --
  Common Stock Dividend                              --        --           --           (5)
- --------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 2000                        317         3           --        3,595
  Issuances of Common Stock,
    and related tax benefits                         11        --          474           --
  Common Stock Repurchases                          (19)       --         (435)        (694)
  Comprehensive Income
Net Earnings                                         --        --           --          913
    Other Comprehensive Income Adjustments
      Change in Net Unrealized Gains
            on Investments, net of tax effects       --        --           --           --
               Comprehensive Income                  --        --           --           --
  Common Stock Dividend                              --        --           --           (9)
- --------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 2001                         309      $ 3      $    39      $ 3,805
- --------------------------------------------------------------------------------------------




                                                  Net Unrealized
                                                     Gains on             Total
                                                    Investments        Shareholders'   Comprehensive
(in millions)                                    Available for Sale       Equity          Income
- ----------------------------------------------------------------------------------------------------
                                                                              
BALANCE AT DECEMBER 31, 1998                         $  44                $ 4,038
  Issuances of Common Stock,
    and related tax benefits                            --                    125
  Common Stock Repurchases                              --                   (983)
  Comprehensive Income
Net Earnings                                            --                    568              $ 568
    Other Comprehensive Income Adjustments
      Change in Net Unrealized Gains
            on Investments, net of tax effects         121                    121                121
                                                                                               -----
               Comprehensive Income                     --                     --              $ 689
                                                                                               -----
  Common Stock Dividend                                 --                     (6)
- ----------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1999                           165                  3,863
  Issuances of Common Stock,
    and related tax benefits                            --                    349
  Common Stock Repurchases                              --                 (1,180)
  Comprehensive Income
Net Earnings                                            --                    736              $ 736
    Other Comprehensive Income Adjustments
      Change in Net Unrealized Gains
            on Investments, net of tax effects         (75)                   (75)               (75)
                                                                                               -----
               Comprehensive Income                     --                     --              $ 661
                                                                                               -----
  Common Stock Dividend                                 --                     (5)
- ----------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 2000                            90                  3,688
  Issuances of Common Stock,
    and related tax benefits                            --                    474
  Common Stock Repurchases                              --                 (1,129)
  Comprehensive Income
Net Earnings                                            --                    913              $ 913
    Other Comprehensive Income Adjustments
      Change in Net Unrealized Gains
            on Investments, net of tax effects         (46)                   (46)               (46)
                                                                                               -----
               Comprehensive Income                     --                     --              $ 867
                                                                                               -----
  Common Stock Dividend                                 --                     (9)
- ----------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 2001                         $  44                $ 3,891
- ----------------------------------------------------------------------------------------------------


See notes to consolidated financial statements.


PAGE  40 UnitedHealth Group

CONSOLIDATED STATEMENTS OF CASH FLOWS



                                                                     For the Year Ended December 31,
(in millions)                                                         2001          2000        1999
- -------------------------------------------------------------------------------------------------------
                                                                                   
OPERATING ACTIVITIES
  Net Earnings                                                      $   913     $  736      $   568
  Noncash Items
    Depreciation and Amortization                                       265        247          233
    Deferred Income Taxes and Other                                      40         73           35
  Net Change in Other Operating Items, net of effects
   from acquisitions, sales of subsidiaries and changes
   in AARP balances
    Accounts Receivable and Other Current Assets                          7         26           84
    Medical Costs Payable                                               156        288          165
    Accounts Payable and Accrued Liabilities                            280         75           68
    Other Policy Liabilities                                            131         87           (8)
    Unearned Premiums                                                    52        (11)          44
- -------------------------------------------------------------------------------------------------------
    CASH FLOWS FROM OPERATING ACTIVITIES                              1,844      1,521        1,189
- -------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES
  Cash Paid for Acquisitions, net of cash assumed and other effects     (92)       (76)        (334)
  Purchases of Property, Equipment and Capitalized Software            (425)      (245)        (196)
  Purchases of Investments                                           (2,088)    (3,022)      (2,208)
  Maturities and Sales of Investments                                 1,467      2,375        2,115
- -------------------------------------------------------------------------------------------------------
    CASH FLOWS USED FOR INVESTING ACTIVITIES                         (1,138)      (968)        (623)
- -------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
  Proceeds from Common Stock Issuances                                  178        228          102
  Proceeds from (Payments of) Commercial Paper, net                     275       (182)         532
  Proceeds from Issuance of Long-Term Debt                              250        400          150
  Payments for Retirement of Long-Term Debt                            (150)         -         (400)
  Common Stock Repurchases                                           (1,129)    (1,180)        (983)
  Dividends Paid                                                         (9)        (5)          (6)
- -------------------------------------------------------------------------------------------------------
    CASH FLOWS USED FOR FINANCING ACTIVITIES                           (585)      (739)        (605)
- -------------------------------------------------------------------------------------------------------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                        121       (186)         (39)
- -------------------------------------------------------------------------------------------------------

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                        1,419      1,605        1,644
- -------------------------------------------------------------------------------------------------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                            $ 1,540    $ 1,419      $ 1,605
- -------------------------------------------------------------------------------------------------------
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES
  Common Stock Issued for Acquisitions                              $   163    $     -      $     -
- -------------------------------------------------------------------------------------------------------


See notes to consolidated financial statements.


PAGE 41 UnitedHealth Group

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[1] DESCRIPTION OF BUSINESS

UnitedHealth Group Incorporated (also referred to as "UnitedHealth Group," "the
company," "we," "us," "our") is a national leader in forming and operating
orderly, efficient markets for the exchange of high quality health and
well-being services. Through independent but strategically aligned,
market-defined businesses, we offer health care access and coverage and related
administrative, technology and information services designed to enable,
facilitate and advance optimal health care.

[2] SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

We have prepared the consolidated financial statements according to accounting
principles generally accepted in the United States and have included the
accounts of UnitedHealth Group and its subsidiaries. We have eliminated all
significant intercompany balances and transactions.

USE OF ESTIMATES

These financial statements include some amounts that are based on our estimates
and judgments. The most significant estimates relate to medical costs, medical
costs payable, contingent liabilities, and asset valuations, allowances and
impairments. We adjust these estimates as more current information becomes
available, and any adjustment could have a significant impact on our
consolidated operating results. The impact of any changes in estimates is
included in the determination of earnings in the period in which the change in
estimate is identified.

REVENUES

We recognize premium revenues in the period in which enrolled members are
entitled to receive health care services. We record premium payments received
from our customers prior to such period as unearned premiums. We recognize fee
revenues in the period the related services are performed. Premium revenues
related to Medicare and Medicaid programs as a percentage of total premium
revenues were 17% in 2001 and 2000, and 21% in 1999.

MEDICAL COSTS AND MEDICAL COSTS PAYABLE

Medical costs include claims paid, claims processed but not yet paid, estimates
for claims received but not yet processed, and estimates for the costs of health
care services people have received, but for which claims have not yet been
submitted.

    We develop our estimates of medical costs payable using actuarial methods
based upon historical claim submission and payment data, cost trends, customer
and product mix, seasonality, utilization of health care services, contracted
service rates and other relevant factors. The estimates may change as actuarial
methods change or as underlying facts upon which estimates are based change. We
did not change actuarial methods during 2001, 2000 and 1999. Management believes
the amount of medical costs payable is adequate to cover the company's liability
for unpaid claims as of December 31, 2001; however, actual claim payments may
differ from established estimates. Adjustments to medical costs payable
estimates are reflected in operating results in the period in which the change
in estimate is identified.

CASH, CASH EQUIVALENTS AND INVESTMENTS

Cash and cash equivalents are highly liquid investments with an original
maturity of three months or less. The fair value of cash and cash equivalents
approximates their carrying value because of the short maturity of the
instruments. Investments with a maturity of less than one year are classified as
short-term. We may sell investments classified as long-term before their
maturity to fund working capital or for other purposes.

PAGE 42  UnitedHealth Group




Because of regulatory restrictions, certain investments are included in
long-term investments regardless of their maturity date. These investments are
classified as held to maturity and are reported at amortized cost. All other
investments are classified as available for sale and reported at fair value
based on quoted market prices. We have no investments classified as trading
securities.

     Unrealized gains and losses on investments available for sale are excluded
from earnings and reported as a separate component of shareholders' equity, net
of income tax effects. We continually monitor the difference between the cost
and estimated fair value of our investments. If any of our investments
experience a decline in value that we believe is other than temporary, we record
a realized loss in Investment and Other Income in our Consolidated Statements of
Operations. To calculate realized gains and losses on the sale of investments,
we use the specific cost of each investment sold.

ASSETS UNDER MANAGEMENT

We administer certain aspects of AARP's insurance program (see Note 5). Pursuant
to our agreement, AARP assets are managed separately from our general investment
portfolio and are used to pay costs associated with the AARP program. These
assets are invested at our discretion, within investment guidelines approved by
AARP. At December 31, 2001, the assets were invested in marketable debt
securities. We do not guarantee any rates of investment return on these
investments and, upon transfer of the AARP contract to another entity, cash
equal in amount to the fair value of these investments would be transferred to
that entity. Because the purpose of these assets is to fund the medical costs
payable and rate stabilization fund liabilities associated with the AARP
contract, assets under management are classified as current assets, consistent
with the classification of these liabilities. Interest earnings and realized
investment gains and losses on these assets accrue to AARP policyholders through
the rate stabilization fund and, as such, are not included in our earnings.
Interest income and realized gains and losses related to assets under management
are recorded as an increase to the AARP rate stabilization fund and were $113
million and $91 million in 2001 and 2000, respectively. Assets under management
are reported at their fair market value, and unrealized gains and losses are
included in the rate stabilization fund associated with the AARP program. As of
December 31, 2001 and 2000, the AARP investment portfolio included net
unrealized gains of $56 million and $19 million, respectively.

PROPERTY, EQUIPMENT AND CAPITALIZED SOFTWARE

Property, equipment and capitalized software is stated at cost, net of
accumulated depreciation and amortization. Capitalized software consists of
certain costs incurred in the development of internal-use software, including
external direct material and service costs and payroll costs of employees fully
devoted to specific software development.

     We calculate depreciation and amortization using the straight-line method
over the estimated useful lives of the assets. The useful lives for property,
equipment and capitalized software are: from three to seven years for furniture,
fixtures and equipment; the shorter of five years or the remaining lease term
for leasehold improvements; and from three to nine years for capitalized
software. The weighted-average useful life of property, equipment and
capitalized software at December 31, 2001, was approximately five years.

     The net book value of property and equipment was $421 million and $303
million as of December 31, 2001 and 2000, respectively. The net book value of
capitalized software was $426 million and $254 million as of December 31, 2001
and 2000, respectively.

PAGE 43 UnitedHealth Group

GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill represents the amount by which the purchase price and transaction costs
of businesses we have acquired exceeds the estimated fair value of the net
tangible assets and identifiable intangible assets of these businesses. Goodwill
and other intangible assets are amortized on a straight-line basis over useful
lives ranging from three years to 40 years, with a weighted-average useful life
of 32 years at December 31, 2001.

     The two most significant components of goodwill and other intangible assets
are: 1) goodwill of $2.2 billion at December 31, 2001, and $2.1 billion at
December 31, 2000, net of accumulated amortization; and 2) employer group
contracts, supporting infrastructure, distribution networks and institutional
knowledge of $512 million at December 31, 2001, and $530 million at December 31,
2000, net of accumulated amortization.

LONG-LIVED ASSETS

We review long-lived assets, including goodwill and other intangible assets, and
property, equipment and capitalized software, for events or changes in
circumstances that would indicate we might not recover their carrying value. We
consider many factors, including estimated future cash flows associated with the
assets, to make this decision. We record assets held for sale at the lower of
their carrying amount or fair value, less any costs for the final settlement.

OTHER POLICY LIABILITIES

Other policy liabilities include the rate stabilization fund associated with the
AARP program (see Note 5) and customer balances related to experience-rated
insurance products.

     Customer balances represent premium payments we have received that exceed
what customers owe based on actual claim experience, and deposit accounts that
have accumulated under experience-rated contracts. At the customer's option,
these balances may be refunded or used to pay future premiums or claims under
eligible contracts.

INCOME TAXES

Deferred income tax assets and liabilities are recognized for the differences
between the financial and income tax reporting bases of assets and liabilities
based on enacted tax rates and laws. The deferred income tax provision or
benefit generally reflects the net change in deferred income tax assets and
liabilities during the year. The current income tax provision reflects the tax
consequences of revenues and expenses currently taxable or deductible on various
income tax returns for the year reported.

STOCK-BASED COMPENSATION

We do not recognize compensation expense in connection with employee stock
option grants because we grant stock options at exercise prices that equal or
exceed the fair market value of the stock on the date the options are granted.
Information on what our stock-based compensation expenses would have been had we
calculated those expenses using the fair market values of outstanding stock
options is included in Note 9.

PAGE 44 UnitedHealth Group

NET EARNINGS PER COMMON SHARE

We compute basic net earnings per common share by dividing net earnings by the
weighted-average number of common shares outstanding during the period. We
determine diluted net earnings per common share using the weighted-average
number of common shares outstanding during the period, adjusted for the dilutive
effect of common stock equivalents, consisting of shares that might be issued
upon exercise of common stock options.

DERIVATIVE FINANCIAL INSTRUMENTS

As part of our risk management strategy, we may enter into interest rate swap
agreements to manage our exposure to interest rate risk. The differential
between fixed and variable rates to be paid or received is accrued and
recognized over the life of the agreements as an adjustment to interest expense
in the Consolidated Statements of Operations.

RECENTLY ISSUED ACCOUNTING STANDARDS

In June 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 141, "Business Combinations," and
SFAS No. 142, "Goodwill and Other Intangible Assets." Under SFAS No. 141,
business combinations initiated after June 30, 2001, must be accounted for using
the purchase method of accounting. Under SFAS No. 142, amortization of goodwill
and indefinite-lived intangible assets will cease, and the carrying value of
these assets will instead be evaluated for impairment using a fair-value-based
test, applied at least annually. We adopted SFAS No. 142 on January 1, 2002,
completed the initial impairment tests of goodwill as required by SFAS No. 142,
and determined that our goodwill is not impaired. The following table shows net
earnings and earnings per common share adjusted to reflect the adoption of the
non-amortization provisions of SFAS No. 142 as of the beginning of the
respective periods:



                                                      For the Year Ended December 31,
(in millions, except per share data)                  2001        2000          1999
- -------------------------------------------------------------------------------------
NET EARNINGS
                                                                    
  Reported Net Earnings                          $     913      $   736      $   568
  Goodwill Amortization, net of tax effects             89           85           76
                                                 ---------      -------      -------
  Adjusted Net Earnings                          $   1,002      $   821      $   644
                                                 ---------      -------      -------

BASIC NET EARNINGS PER COMMON SHARE
  Reported Basic Net Earnings per Share          $    2.92      $   2.27     $  1.63
  Goodwill Amortization, net of tax effects           0.29          0.26        0.22
                                                 ---------      -------      -------
  Adjusted Basic Net Earnings per Share          $    3.21      $   2.53     $  1.85
                                                 ---------      -------      -------

DILUTED NET EARNINGS PER COMMON SHARE
  Reported Diluted Net Earnings per Share        $    2.79      $   2.19     $  1.60
  Goodwill Amortization, net of tax effects           0.28          0.25        0.21
                                                 ---------      -------      -------
  Adjusted Diluted Net Earnings per Share        $    3.07      $   2.44     $  1.81
                                                 ---------      -------      -------


In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations." SFAS No. 143 addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated retirement costs. We must adopt the standard on January 1, 2003. We
do not expect the adoption of SFAS No. 143 will have any impact on our financial
position or results of operations.

PAGE 45 UnitedHealth Group

      In August 2001, the FASB issued SFAS No. 144, "Accounting for Impairment
or Disposal of Long-Lived Assets," which provides new accounting and financial
reporting guidance for the impairment or disposal of long-lived assets and the
disposal of segments of a business. We adopted the standard on January 1, 2002,
and its adoption did not have any impact on our financial position or results of
operations.

RECLASSIFICATIONS

Certain 1999 and 2000 amounts in the consolidated financial statements have been
reclassified to conform to the 2001 presentation. These reclassifications have
no effect on net earnings or shareholders' equity as previously reported.

[3] ACQUISITIONS

In October 2001, our Specialized Care Services business segment acquired
Spectera, Inc. (Spectera), a leading vision care benefit company in the United
States, to expand the breadth of service offerings we extend to our customers.
We paid $37 million in cash, accrued $25 million for additional consideration
due, and issued 1.2 million shares of common stock with a value of $81 million
in exchange for all outstanding shares of Spectera. The purchase price and
related acquisition costs of approximately $146 million exceeded the preliminary
estimated fair value of net assets acquired by $126 million. Under the purchase
method of accounting, we assigned this amount to goodwill. The results of
Spectera's operations since the acquisition date are included in our 2001
Consolidated Statement of Operations. The pro forma effects of the Spectera
acquisition on our consolidated financial statements were not material. In
February 2002, the $25 million of accrued consideration was satisfied by issuing
an additional 335,000 shares of our common stock.

     In September 1999, our Ingenix business segment acquired Worldwide Clinical
Trials, Inc. (WCT), a leading clinical research organization. We paid $214
million in cash in exchange for all outstanding shares of WCT, and we accounted
for the purchase using the purchase method of accounting. Only the
post-acquisition results of WCT are included in our consolidated financial
statements. The purchase price and other acquisition costs exceeded the
estimated fair value of net assets acquired by $214 million, which was assigned
to goodwill and is being amortized over its estimated useful life of 30 years.
The pro forma effects of the WCT acquisition on our consolidated financial
statements were not material.

     In June 1999, our Specialized Care Services business segment acquired
Dental Benefit Providers, Inc. (DBP), one of the largest dental benefit
management companies in the United States. We paid $105 million in cash, and we
accounted for the acquisition using the purchase method of accounting. The
purchase price and other acquisition costs exceeded the estimated fair value of
net assets acquired by $105 million, which was assigned to goodwill and is being
amortized over its estimated useful life of 40 years. The pro forma effects of
the DBP acquisition on our consolidated financial statements were not material.

     For the years ended December 31, 2001, 2000 and 1999, consideration paid or
issued for smaller acquisitions accounted for under the purchase method, which
were not material to our consolidated financial statements, was $134 million,
$76 million and $15 million, respectively.

PAGE 46  UnitedHealth Group

[4] OPERATIONAL REALIGNMENT AND OTHER CHARGES

In conjunction with a comprehensive operational realignment initiated in 1998,
we developed and approved an implementation plan (the Plan). We recognized
corresponding charges to operations of $725 million in the second quarter of
1998, which reflected the estimated costs to be incurred under the Plan. The
charges included costs associated with asset impairments; employee terminations;
disposing of or discontinuing business units, product lines and contracts; and
consolidating and eliminating certain claim processing and customer service
operations and associated real estate obligations.

     We completed our operational realignment plan in 2001. Actual costs
incurred executing the Plan exceeded estimates by approximately $4 million,
which has been included in 2001 operating costs in the Consolidated Statements
of Operations. These excess costs were incurred in the fourth quarter of 2001.
Activities associated with the Plan resulted in the reduction of approximately
5,100 positions, affecting approximately 5,800 people.

     As of December 31, 2000, we had completed all planned business dispositions
and market exits pursuant to the Plan. Accordingly, our 2001 financial
statements do not include the operating results of exited businesses or markets.
Our Consolidated Statements of Operations include results for businesses
disposed of and markets exited in connection with our operational realignment as
follows: $312 million in revenues and $9 million in earnings from operations in
2000, and $689 million in revenues and $41 million of losses from operations in
1999. These amounts do not include operating results from the counties where
UnitedHealthcare withdrew its Medicare product offerings effective January 1,
2001, and January 1, 2000. Annual revenues for 2000 from the counties exited
effective January 1, 2001, were approximately $320 million. Annual revenues for
1999 from the counties exited effective January 1, 2000, were approximately $230
million.

     The operational realignment and other charges did not cover certain aspects
of the Plan, including new information systems, data conversions, process
re-engineering, temporary duplicate staffing costs as we consolidated processing
and service centers, and employee relocation and training. These costs were
expensed as incurred or capitalized, as appropriate. During 2001, 2000 and 1999,
we incurred expenses of approximately $20 million, $57 million and $52 million,
respectively, related to these activities.

     The table below is a roll-forward of accrued operational realignment and
other charges, which are included in Accounts Payable and Accrued Liabilities in
the accompanying Consolidated Balance Sheets (in millions):




                                                         Severance and    Noncancelable     Disposition of
                                             Asset       Outplacement         Lease         Businesses and
                                           Impairments      Costs          Obligations       Other Costs       Total
- --------------------------------------------------------------------------------------------------------------------
                                                                                               
Balance at December 31, 1997                  $  --         $  --            $  --              $  --         $  --
  Provision for Operational Realignment
    and Other Charges                           430           142               82                 71           725
  Additional Charges (Credits)                   21           (20)              (9)                 8            --
  Cash Payments                                  --           (19)              (6)               (13)          (38)
  Noncash Charges                              (451)           --               --                 --          (451)
- --------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1998                     --           103               67                 66           236
  Additional Charges (Credits)                   --           (22)              13                  9            --
  Cash Payments                                  --           (46)             (18)               (45)         (109)
- -------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1999                     --            35               62                 30           127
  Cash Payments                                  --           (24)             (20)               (18)          (62)
- --------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2000                     --            11               42                 12            65
  Additional Charges (Credits)                   --            10               --                 (6)            4
  Cash Payments                                  --           (21)             (11)                (6)          (38)
  Noncash Charges(1)                             --            --              (31)                --           (31)
- -------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 2001                  $  --         $  --            $  --              $  --         $  --
====================================================================================================================


- --------
(1) Consists of noncancelable lease obligations for which definitive subleases
have been finalized. These amounts have been transferred to other liability
accounts as they are fixed and determinable obligations.

PAGE 47 UnitedHealth Group

[5] AARP

In January 1998, we began providing services under a 10-year contract to provide
insurance products and services to members of AARP. Under the terms of the
contract, we are compensated for claim administration and other services as well
as for assuming underwriting risk. We are also engaged in product development
activities to complement the insurance offerings under this program. Premium
revenues from our portion of the AARP insurance offerings were approximately
$3.5 billion during 2001, 2000 and 1999.

     The underwriting gains or losses related to the AARP business are recorded
as an increase or decrease to a rate stabilization fund (RSF). The primary
components of the underwriting results are premium revenue, medical costs,
investment income, administrative expenses, member service expenses, marketing
expenses and premium taxes. Underwriting gains and losses are charged to the RSF
and accrue to AARP policyholders, unless cumulative net losses were to exceed
the balance in the RSF. To the extent underwriting losses exceed the balance in
the RSF, we would have to fund the deficit. Any deficit we fund could be
recovered by underwriting gains in future periods of the contract. The RSF
balance is reported in Other Policy Liabilities in the accompanying Consolidated
Balance Sheets. We believe the RSF balance is sufficient to cover potential
future underwriting or other risks associated with the contract.

     When we entered the contract, we assumed the policy and other policy
liabilities related to the AARP program, and we received cash and premium
receivables from the previous insurance carrier equal to the carrying value of
these liabilities as of January 1, 1998. The following AARP program-related
assets and liabilities are included in our Consolidated Balance Sheets (in
millions):



                                                 Balance as of December 31,
                                             2001                           2000
- ---------------------------------------------------------------------------------
                                                                     
Assets Under Management                     $1,882                         $1,625
Accounts Receivable                         $  281                         $  277
Medical Costs Payable                       $  867                         $  855
Other Policy Liabilities                    $1,180                         $  932
Accounts Payable and Accrued Liabilities    $  116                         $  115
- ---------------------------------------------------------------------------------


The effects of changes in balance sheet amounts associated with the AARP program
accrue to AARP policyholders through the RSF balance. Accordingly, we do not
include the effect of such changes in our Consolidated Statements of Cash Flows.

PAGE 48 UnitedHealth Group

[6] CASH, CASH EQUIVALENTS AND INVESTMENTS

As of December 31, the amortized cost, gross unrealized holding gains and
losses, and fair value of cash, cash equivalents and investments were as follows
(in millions):



                                         Amortized      Gross Unrealized   Gross Unrealized      Fair
2001                                        Cost            Gains             Losses            Value
- -----------------------------------------------------------------------------------------------------
                                                                                   
CASH AND CASH EQUIVALENTS                  $1,540          $   --             $   --           $1,540
DEBT SECURITIES -- AVAILABLE FOR SALE       3,806             121                (20)           3,907
EQUITY SECURITIES -- AVAILABLE FOR SALE       201              16                (46)             171
DEBT SECURITIES -- HELD TO MATURITY            80              --                 --               80
- -----------------------------------------------------------------------------------------------------
      TOTAL CASH AND INVESTMENTS           $5,627          $  137             $  (66)          $5,698
- -----------------------------------------------------------------------------------------------------

2000
- -----------------------------------------------------------------------------------------------------
Cash and Cash Equivalents                  $1,419          $   --             $   --           $1,419
Debt Securities -- Available for Sale       3,198              89                 (6)           3,281
Equity Securities -- Available for Sale       201              61                 --              262
Debt Securities -- Held to Maturity            91              --                 --               91
- -----------------------------------------------------------------------------------------------------
      Total Cash and Investments           $4,909          $  150             $   (6)          $5,053
- -----------------------------------------------------------------------------------------------------


As of December 31, 2001, debt securities consisted of $1,073 million in U.S.
Government and Agency obligations, $1,684 million in state and municipal
obligations, and $1,230 million in corporate obligations. At December 31, 2001,
we held $306 million in debt securities with maturities less than one year,
$1,475 million in debt securities maturing in one to five years, and $2,206
million in debt securities with maturities of more than five years.

     During 2001, 2000 and 1999, respectively, we contributed UnitedHealth
Capital investments valued at approximately $22 million, $52 million and $50
million to the UnitedHealth Foundation, a non-consolidated, not-for-profit
organization. The realized gain of approximately $18 million in 2001, $51
million in 2000 and $49 million in 1999 was offset by the related contribution
expense of $22 million in 2001, $52 million in 2000 and $50 million in 1999. The
net expense of $4 million in 2001 and $1 million in both 2000 and 1999 is
included in Investment and Other Income in the accompanying Consolidated
Statements of Operations.

     In a separate disposition of UnitedHealth Capital investments during 2000,
we realized a gain of $27 million.

     We recorded realized gains and losses on the sale of investments, excluding
the UnitedHealth Capital dispositions described above, as follows (in millions):



                                              For the Year Ended December 31,
                                         2001             2000               1999
- ---------------------------------------------------------------------------------
                                                                  
Gross Realized Gains                     $ 30             $ 12             $  9
Gross Realized Losses                     (19)             (46)             (15)
- ---------------------------------------------------------------------------------
  Net Realized Gains (Losses)            $ 11             $(34)            $ (6)
- ---------------------------------------------------------------------------------


PAGE 49 United Health Group


[7] COMMERCIAL PAPER AND DEBT

Commercial paper and debt consisted of the following as of December 31 (in
millions):



                                                           2001                                      2000
                                                ------------------------------------------------------------------
                                                 Carrying             Fair               Carrying             Fair
                                                  Value              Value                Value              Value
- ------------------------------------------------------------------------------------------------------------------
                                                                                               
Commercial Paper                               $   684             $   684             $   409             $   409
Floating-Rate Notes
  due November 2001                                 --                  --                 150                 150
Floating-Rate Notes
  due November 2003                                100                 100                  --                  --
Floating-Rate Notes
  due November 2004                                150                 150                  --                  --
6.6% Senior Unsecured Notes
  due December 2003                                250                 266                 250                 250
7.5% Senior Unsecured Notes
  due November 2005                                400                 433                 400                 413
- ------------------------------------------------------------------------------------------------------------------
Total Commercial Paper and Debt                  1,584               1,633               1,209               1,222
Less Current Maturities                           (684)               (684)               (559)               (559)
- ------------------------------------------------------------------------------------------------------------------
Long-Term Debt, less current maturities        $   900             $   949             $   650             $   663
- ------------------------------------------------------------------------------------------------------------------


As of December 31, 2001, our outstanding commercial paper had interest rates
ranging from 1.9% to 2.7%. In November 2001, we issued $100 million of
floating-rate notes due November 2003 and $150 million of floating-rate notes
due November 2004. The interest rates on the notes are reset quarterly to the
three-month LIBOR (London Interbank Offered Rate) plus 0.3% for the notes due
November 2003 and to the three-month LIBOR plus 0.6% for the notes due November
2004. As of December 31, 2001, the applicable rates on the notes were 2.4% and
2.7%, respectively. A portion of the proceeds from these borrowings was used to
repay the $150 million of floating-rate notes that matured in November 2001.

     In January 2002, we issued $400 million of 5.2% fixed-rate notes due
January 2007. Proceeds from this borrowing will be used to repay commercial
paper and for general corporate purposes including working capital, capital
expenditures, business acquisitions and share repurchases. When we issued these
notes, we entered into interest rate swap agreements that qualify as fair value
hedges to convert a portion of our interest rate exposure from a fixed to a
variable rate. The interest rate swap agreements have an aggregate notional
amount of $200 million maturing January 2007. The variable rates approximate the
six-month LIBOR and are reset on a semiannual basis.

     We have credit arrangements for $900 million that support our commercial
paper program. These credit arrangements include a $450 million revolving
facility that expires in July 2005, and a $450 million, 364-day facility that
expires in July 2002. We also have the capacity to issue approximately $200
million of extendible commercial notes (ECNs). As of December 31, 2001 and 2000,
we had no amounts outstanding under our credit facilities or ECNs.

     Our debt agreements and credit facilities contain various covenants, the
most restrictive of which require us to maintain a debt-to-total-capital ratio
below 45% and to exceed specified minimum interest coverage levels. We are in
compliance with the requirements of all debt covenants.

Maturities of commercial paper and debt, excluding the impact of the debt issued
in January 2002, for the years ending December 31 are as follows (in millions):




      2002                2003                2004               2005                2006           Thereafter
 ---------------------------------------------------------------------------------------------------------------
                                                                                       
   $  684              $  350              $  150             $  400              $   -               $   -
 ---------------------------------------------------------------------------------------------------------------


We made cash payments for interest of $91 million, $68 million and $43 million
in 2001, 2000 and 1999, respectively.

PAGE 50 UnitedHealth Group

[8] SHAREHOLDERS' EQUITY

REGULATORY CAPITAL AND DIVIDEND RESTRICTIONS

We conduct our operations through our wholly-owned subsidiaries. These companies
are subject to standards established by the National Association of Insurance
Commissioners (NAIC) that, among other things, require them to maintain
specified levels of statutory capital, as defined by each state, and restrict
the timing and amount of dividends and other distributions that may be paid to
their parent companies. Generally, the amount of dividend distributions that may
be paid by a regulated subsidiary, without prior approval by state regulatory
authorities, is limited based on the entity's level of statutory net income and
statutory capital and surplus. At December 31, 2001, approximately $660 million
of our $5.7 billion of cash and investments was held by non-regulated
subsidiaries. Of this amount, approximately $260 million was segregated for
future regulatory capital needs and $230 million was available for general
corporate use, including acquisitions and share repurchases. The remaining $170
million consists primarily of public and non-public equity securities held by
UnitedHealth Capital, our investment capital business.

     The agencies that assess our creditworthiness also consider capital
adequacy levels when establishing our debt ratings. Consistent with our
intention of maintaining our senior debt ratings in the "A" range, we maintain
an aggregate statutory capital and surplus level for our regulated subsidiaries
that is significantly higher than the level regulators require. As of December
31, 2001, our regulated subsidiaries had aggregate statutory capital and surplus
of approximately $2.0 billion, more than $1.1 billion above the $850 million of
required aggregate capital and surplus.

STOCK REPURCHASE PROGRAM

Under our board of directors' authorization, we maintain a common stock
repurchase program. Repurchases may be made from time to time at prevailing
prices, subject to restrictions on volume, pricing and timing. During 2001, we
repurchased 19.6 million shares for an aggregate of $1.1 billion. Through
December 31, 2001, we had repurchased approximately 112.5 million shares for an
aggregate cost of $3.7 billion since the program began in November 1997. As of
December 31, 2001, we had board of directors' authorization to purchase up to an
additional 8.8 million shares of our common stock. In February 2002, the board
of directors authorized us to repurchase up to an additional 30 million shares
of common stock under the program.

     As part of our share repurchase activities, we have entered into agreements
with an independent third party to purchase shares of our common stock, where
the number of shares we purchase, if any, depends upon market conditions and
other contractual terms. As of December 31, 2001, we had conditional agreements
to purchase up to 6.1 million shares of our common stock at various times and
prices through 2003, at an average price of approximately $58 per share.

PREFERRED STOCK

At December 31, 2001, we had 10 million shares of $0.001 par value preferred
stock authorized for issuance, and no preferred shares issued and outstanding.

DIVIDENDS

On February 12, 2002, the board of directors approved an annual dividend for
2002 of $0.03 per share. The dividend will be paid on April 17, 2002, to
shareholders of record at the close of business on April 1, 2002.

[9] STOCK-BASED COMPENSATION PLANS

The company maintains various stock and incentive plans for the benefit of
eligible employees and directors. As of December 31, 2001, employee stock and
incentive plans allowed for the future granting of up to 29.6 million shares as
incentive or non-qualified stock options, stock appreciation rights, restricted
stock awards and performance awards. Our non-employee director stock option plan
allowed for future granting of 710,000 non-qualified stock options as of
December 31, 2001.

PAGE 51 UnitedHealth Group

     Stock options are granted at an exercise price not less than the fair
market value of the common stock at the date of grant. They generally vest over
four years and may be exercised up to 10 years from the date of grant. Activity
under our various stock plans is summarized in the table below (shares in
thousands):



                                             2001                               2000                               1999
                                     ------------------------------    ---------------------------    ------------------------------
                                                 Weighted-Average                  Weighted-Average                 Weighted-Average
                                     Shares      Exercise Price        Shares      Exercise Price     Shares        Exercise Price
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  
Outstanding at Beginning of Year      38,810         $22                44,080         $19             36,748            $19
Granted                                8,333         $53                 8,516         $30             14,406            $20
Exercised                             (7,716)        $20               (12,331)        $17             (4,666)           $17
Forfeited                             (1,090)        $25                (1,455)        $20             (2,408)           $20
- ------------------------------------------------------------------------------------------------------------------------------------
Outstanding at End of Year            38,337         $29                38,810         $22             44,080            $19
- ------------------------------------------------------------------------------------------------------------------------------------
Exercisable at End of Year            19,585         $21                17,367         $20             15,558            $17
- ------------------------------------------------------------------------------------------------------------------------------------





As of December 31, 2001                             Options Outstanding                         Options Exercisable
                             ---------------------------------------------------------     -----------------------------
                                              Weighted-Average
    Range of                 Number             Remaining         Weighted-Average       Number        Weighted-Average
Exercise Prices            Outstanding      Option Term(years)     Exercise Price      Exercisable      Exercise Price
- ------------------------------------------------------------------------------------------------------------------------
                                                                                              
    $ 0-$20                   6,170              5.4                $   17                 5,253             $  17
    $21-$40                  23,853              7.4                $   24                14,188             $  22
    $41-$70                   8,314              9.1                $   53                   144             $  51
- ------------------------------------------------------------------------------------------------------------------------
    $ 0-$70                  38,337              7.4                $   29                19,585             $  21
- ------------------------------------------------------------------------------------------------------------------------


We do not recognize compensation expense in connection with stock option grants
because we grant stock options at exercise prices that equal or exceed the fair
market value of the stock at the time options are granted. If we had determined
compensation expense using fair market values for the stock options, net
earnings per common share would have been reduced to the following pro forma
amounts:



                                                               2001          2000           1999
- ------------------------------------------------------------------------------------------------
                                                                                  
Net Earnings (in millions)
  As Reported                                                  $913          $736          $ 568
  Pro Forma                                                    $831          $660          $ 531
- ------------------------------------------------------------------------------------------------
Basic Net Earnings per Common Share
  As Reported                                                  $2.92         $2.27         $1.63
  Pro Forma                                                    $2.66         $2.04         $1.52
- ------------------------------------------------------------------------------------------------
Diluted Net Earnings per Common Share
  As Reported                                                  $2.79         $2.19         $1.60
  Pro Forma                                                    $2.54         $1.96         $1.50
- ------------------------------------------------------------------------------------------------
Weighted-Average Fair Value per Share of
  Options Granted                                              $  23         $  14         $  12
- ------------------------------------------------------------------------------------------------


To determine compensation cost under the fair value method, the fair value of
each option grant is estimated on the date of grant using the Black-Scholes
option-pricing model. Principal assumptions we used in applying the
Black-Scholes model were as follows:



                             2001     2000      1999
- ----------------------------------------------------
                                      
Risk-Free Interest Rate       3.7%     5.0%     6.7%
Expected Volatility          45.9%    49.0%    50.0%
Expected Dividend Yield       0.1%     0.1%     0.1%
Expected Life in Years        4.8      4.5      5.0
- ----------------------------------------------------


We also maintain a non-leveraged employee stock ownership plan and an employee
stock purchase plan. Activity related to these plans was not significant in
relation to our consolidated financial results in 2001, 2000 and 1999.

PAGE 52 UnitedHealth Group


[10] INCOME TAXES

Components of the Provision (Benefit) for Income Taxes



Year Ended December 31, (in millions)                     2001       2000     1999
- ----------------------------------------------------------------------------------
                                                                    
Current
  Federal                                                 $ 524     $ 330    $ 264
  State                                                      45        38       36
- ----------------------------------------------------------------------------------
    Total Current                                           569       368      300
Deferred                                                    (10)       51       26
- ----------------------------------------------------------------------------------
    Total Provision                                       $ 559     $ 419    $ 326
- ----------------------------------------------------------------------------------



Reconciliation of the Tax Provision at the U.S. Federal Statutory Rate to the
Provision for Income Taxes



Year Ended December 31, (in millions)                2001            2000           1999
- ------------------------------------------------------------------------------------------
                                                                           
Tax Provision at the
  U.S. Federal Statutory Rate                       $ 515           $ 404           $ 313
State Income Taxes, net of federal benefit             29              29              24
Tax-Exempt Investment Income                          (21)            (17)            (16)
Non-deductible Amortization                            29              27              25
Charitable Contributions                               --             (18)            (16)
Other, net                                              7              (6)             (4)
- ------------------------------------------------------------------------------------------
  Provision for Income Taxes                        $ 559           $ 419           $ 326
- ------------------------------------------------------------------------------------------


Components of Deferred Income Tax Assets and Liabilities



As of December 31, (in millions)                 2001             2000
- ----------------------------------------------------------------------
                                                         
Deferred Income Tax Assets
  Accrued Expenses and Allowances              $ 198           $ 126
  Unearned Premiums                               65              74
  Medical Costs Payable and
    Other Policy Liabilities                      84              84
  Net Operating Loss Carryforwards                39              42
  Other                                           30              10
- ----------------------------------------------------------------------
Subtotal                                         416             336
  Less: Valuation Allowances                     (53)            (56)
- ----------------------------------------------------------------------
Total Deferred Income Tax Assets                 363             280
- ----------------------------------------------------------------------

Deferred Income Tax Liabilities
  Capitalized Software Development              (128)            (80)
  Net Unrealized Gains on Investments
    Available for Sale                           (31)            (59)
  Depreciation & Amortization                    (22)            (12)
- ----------------------------------------------------------------------
Total Deferred Income Tax Liabilities           (181)           (151)
      Net Deferred Income Tax Assets           $ 182           $ 129
- ----------------------------------------------------------------------


Valuation allowances are provided when it is considered unlikely that deferred
tax assets will be realized. The valuation allowance primarily relates to future
tax benefits on certain purchased domestic and foreign net operating loss
carryforwards.

     We made cash payments for income taxes of $384 million in 2001, $352
million in 2000 and $214 million in 1999. We increased additional paid-in
capital and reduced income taxes payable by $133 million in 2001, $116 million
in 2000 and $23 million in 1999 to reflect the tax benefit we received upon the
exercise of non-qualified stock options.

     The company, together with its wholly-owned subsidiaries, files a
consolidated federal income tax return. Tax returns for fiscal years 1998 and
1999 are currently being examined by the Internal Revenue Service. We do not
believe any adjustments that may result will have a significant impact on our
consoli-

PAGE 53 UnitedHealth Group

dated operating results or financial position. Examinations for the 1996
and 1997 tax years have been completed and did not have a significant impact on
our consolidated operating results or financial position.

[11] COMMITMENTS AND CONTINGENCIES

LEASES

We lease facilities, computer hardware and other equipment under long-term
operating leases that are noncancelable and expire on various dates through
2011. Rent expense under all operating leases was $135 million in 2001, $132
million in 2000 and $129 million in 1999.

     At December 31, 2001, future minimum annual lease payments, net of sublease
income, under all noncancelable operating leases were as follows (in millions):



           2002               2003               2004               2005               2006           Thereafter
- ------------------------------------------------------------------------------------------------------------------
                                                                                      
          $  99              $  90              $  77              $  68              $  60             $ 224


SERVICE AGREEMENTS

In 1995 and 1996, we entered into three separate contracts for certain data
center operations and support, and network and voice communication services,
each with an approximate term of 10 years. Expenses incurred in connection with
these agreements were $196 million in 2001, $182 million in 2000 and $172
million in 1999.

LEGAL MATTERS

Because of the nature of our businesses, we are routinely party to a variety of
legal actions related to the design, management and offerings of our services.
These matters include: claims relating to health care benefits coverage; medical
malpractice actions; allegations of anti-competitive and unfair business
activities; disputes over compensation and termination of contracts including
those with physicians and other health care providers; disputes related to our
administrative services, including actions alleging claim administration errors
and failure to disclose rate discounts and other fee and rebate arrangements;
disputes over benefit copayment calculations; claims related to disclosure of
certain business practices; and claims relating to customer audits and contract
performance.

     In 1999, a number of class action lawsuits were filed against us and
virtually all major entities in the health benefits business. The suits are
purported class actions on behalf of certain customers and physicians for
alleged breaches of federal statutes, including the Employee Retirement Income
Security Act of 1974, as amended (ERISA), and the Racketeer Influenced Corrupt
Organization Act (RICO). Although the results of pending litigation are always
uncertain, we do not believe the results of any such actions, including those
described above, currently threatened or pending will, individually or in
aggregate, have a material adverse effect on our results of operations or
financial position.

GOVERNMENT REGULATION

Our business is regulated domestically at federal, state and local levels, and
internationally. The laws and rules governing our business are subject to
frequent change, and agencies have broad latitude to administer those
regulations. State legislatures and Congress continue to focus on health care
issues as the subject of proposed legislation. Existing or future laws and rules
could force us to change how we do business, restrict revenue and enrollment
growth, increase our health care and administrative costs and capital
requirements, and increase our liability related to coverage interpretations or
other actions. Further, we must obtain and maintain regulatory approvals to
market many of our products.

     We are also subject to various governmental reviews, audits and
investigations. However, we do not believe the results of any of the current
audits, individually or in the aggregate, will have a material adverse effect on
our financial position or results of operations.

[12] SEGMENT FINANCIAL INFORMATION

Factors used in determining our reportable business segments include the nature
of operating activities, existence of separate senior management teams, and the
type of information presented to the company's chief operating decision-maker to
evaluate our results of operations.

PAGE 54 UnitedHealth Group

     Our accounting policies for business segment operations are the same as
those described in the Summary of Significant Accounting Policies (see Note 2).
Transactions between business segments principally consist of customer service
and claim processing services Uniprise provides to UnitedHealthcare, certain
product offerings sold to Uniprise and UnitedHealthcare customers by Specialized
Care Services, and sales of medical benefits cost, quality and utilization data
and predictive modeling to UnitedHealthcare by Ingenix. These transactions are
recorded at management's best estimate of fair value, as if the services were
purchased from or sold to third parties. All intersegment transactions are
eliminated in consolidation. Assets and liabilities that are jointly used are
assigned to each segment using estimates of pro-rata usage. Cash and investments
are assigned such that each segment has minimum specified levels of regulatory
capital or working capital for non-regulated businesses. The "Corporate and
Eliminations" column includes companywide costs associated with core process
improvement initiatives, net expenses from charitable contributions to the
UnitedHealth Foundation, and eliminations of intersegment transactions. In
accordance with accounting principles generally accepted in the United States,
segments with similar economic characteristics may be combined. The financial
results of UnitedHealthcare and Ovations have been combined in the Health Care
Services segment column in the tables presented on this page because both
businesses have similar products and services, types of customers, distribution
methods and operational processes, and both operate in a similar regulatory
environment (in millions):



                                                                                                       Corporate
                                   Health Care                     Specialized                           and
2001                                Services          Uniprise    Care Services        Ingenix        Eliminations     Consolidated
- -----------------------------------------------------------------------------------------------------------------------------------
                                                                                                     
REVENUES -- EXTERNAL CUSTOMERS      $20,259          $ 1,841          $   734          $   339          $    --           $23,173
REVENUES -- INTERSEGMENT                 --              587              504              108           (1,199)               --
INVESTMENT AND OTHER INCOME             235               34               16               --               (4)              281
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL REVENUES                      $20,494          $ 2,462          $ 1,254          $   447          $(1,203)          $23,454
- -----------------------------------------------------------------------------------------------------------------------------------

EARNINGS FROM OPERATIONS            $   944          $   374          $   214          $    48          $   (14)          $ 1,566
TOTAL ASSETS(1)                     $ 9,014          $ 1,737          $   848          $   771          $  (200)          $12,170
NET ASSETS(1)                       $ 3,408          $ 1,020          $   514          $   646          $  (158)          $ 5,430

PURCHASES OF PROPERTY, EQUIPMENT
    AND CAPITALIZED SOFTWARE        $   152          $   171          $    33          $    69          $    --           $   425
DEPRECIATION AND AMORTIZATION       $   101          $    81          $    33          $    50          $    --           $   265
- -----------------------------------------------------------------------------------------------------------------------------------
2000
- -----------------------------------------------------------------------------------------------------------------------------------
Revenues -- External Customers      $18,502          $ 1,595          $   503          $   290          $    --           $20,890
Revenues -- Intersegment                 --              520              461               85           (1,066)               --
Investment and Other Income             194               25               10               --                3               232
- -----------------------------------------------------------------------------------------------------------------------------------
Total Revenues                      $18,696          $ 2,140          $   974          $   375          $(1,063)          $21,122
- -----------------------------------------------------------------------------------------------------------------------------------

Earnings From Operations            $   739          $   289          $   174          $    32          $   (34)          $ 1,200
Total Assets(1)                     $ 8,118          $ 1,578          $   525          $   730          $  (133)          $10,818
Net Assets(1)                       $ 3,085          $   978          $   276          $   617          $  (113)          $ 4,843

Purchases of Property, Equipment
    and Capitalized Software        $    88          $    94          $    28          $    35          $    --           $   245
Depreciation and Amortization       $   100          $    75          $    25          $    47          $    --           $   247
- -----------------------------------------------------------------------------------------------------------------------------------

1999
- -----------------------------------------------------------------------------------------------------------------------------------
Revenues -- External Customers      $17,419          $ 1,398          $   328          $   198          $    --           $19,343
Revenues -- Intersegment                 --              445              393               59             (897)               --
Investment and Other Income             162               22                5                1               29               219
- -----------------------------------------------------------------------------------------------------------------------------------
Total Revenues                      $17,581          $ 1,865          $   726          $   258          $  (868)          $19,562
- -----------------------------------------------------------------------------------------------------------------------------------

Earnings From Operations            $   578          $   222          $   128          $    25          $   (10)          $   943
Total Assets(1)                     $ 7,364          $ 1,411          $   446          $   683          $   206           $10,110
Net Assets(1)                       $ 2,892          $   953          $   230          $   573          $   221           $ 4,869
- -----------------------------------------------------------------------------------------------------------------------------------

Purchases of Property, Equipment
    and Capitalized Software        $    69          $    71          $    28          $    28          $    --           $   196
Depreciation and Amortization       $    97          $    76          $    23          $    37          $    --           $   233
- -----------------------------------------------------------------------------------------------------------------------------------


- --------
(1) Total Assets and Net Assets exclude, where applicable, debt and accrued
interest of $1,603 million, $1,222 million and $1,002 million, income
tax-related assets of $316 million, $235 million and $163 million, and income
tax-related liabilities of $252 million, $168 million and $167 million as of
December 31, 2001, 2000 and 1999, respectively.

PAGE 55 UnitedHealth Group



[13] QUARTERLY FINANCIAL DATA (UNAUDITED)



                                                                           For the Quarter Ended
(in millions, except per share data)                        March 31      June 30       September 30   December 31
- ------------------------------------------------------------------------------------------------------------------
                                                                                           
2001
REVENUES                                                    $ 5,680       $  5,813       $  5,941      $  6,020
MEDICAL AND OPERATING EXPENSES                              $ 5,315       $  5,429       $  5,545      $  5,599
EARNINGS FROM OPERATIONS                                    $   365       $    384       $    396      $    421
NET EARNINGS                                                $   212       $    223       $    231      $    247
BASIC NET EARNINGS PER COMMON SHARE                         $  0.67       $   0.71       $   0.75      $   0.79
DILUTED NET EARNINGS PER COMMON SHARE                       $  0.64       $   0.68       $   0.71      $   0.76
- ------------------------------------------------------------------------------------------------------------------

2000
Revenues                                                    $ 5,099       $  5,220       $  5,369      $  5,434
Medical and Operating Expenses                              $ 4,826       $  4,932       $  5,060      $  5,104
Earnings From Operations                                    $   273       $    288       $    309      $    330
Net Earnings                                                $   174(1)    $    170       $    182      $    210(2)
Basic Net Earnings per Common Share                         $  0.53       $   0.52       $   0.56      $   0.66
Diluted Net Earnings per Common Share                       $  0.52(1)    $   0.50       $   0.54      $   0.63(2)
- ------------------------------------------------------------------------------------------------------------------


- -------
(1) Includes a $14 million, net permanent tax benefit related to the
contribution of UnitedHealth Capital investments to the UnitedHealth Foundation.
Excluding this benefit, Net Earnings and Diluted Net Earnings per Common Share
were $160 million and $0.48 per share, respectively.

(2)  Includes a $27 million gain ($17 million after tax) related to the
disposition of UnitedHealth Capital investments. Excluding this gain, Net
Earnings and Diluted Net Earnings per Common Share were $193 million and $0.58
per share, respectively.

PAGE 56 UnitedHealth Group


REPORT OF MANAGEMENT

The management of UnitedHealth Group is responsible for the integrity and
objectivity of the consolidated financial information contained in this annual
report. The consolidated financial statements and related information were
prepared according to accounting principles generally accepted in the United
States and include some amounts that are based on management's best estimates
and judgments.

     To meet its responsibility, management depends on its accounting systems
and related internal accounting controls. These systems are designed to provide
reasonable assurance, at an appropriate cost, that financial records are
reliable for use in preparing financial statements and that assets are
safeguarded. Qualified personnel throughout the organization maintain and
monitor these internal accounting controls on an ongoing basis.

     The Audit Committee of the board of directors, composed entirely of
directors who are not employees of the company, meets periodically and privately
with the company's independent public accountants and management to review
accounting, auditing, internal control, financial reporting and other matters.

WILLIAM W. MCGUIRE, MD
Chairman and Chief Executive Officer

STEPHEN J. HEMSLEY
President and Chief Operating Officer

PATRICK J. ERLANDSON
Chief Financial Officer


REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders and
Directors of UnitedHealth Group Incorporated:

We have audited the accompanying consolidated balance sheets of UnitedHealth
Group Incorporated (a Minnesota Corporation) and Subsidiaries as of December 31,
2001 and 2000, and the related consolidated statements of operations, changes in
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 2001. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of UnitedHealth Group
Incorporated and its Subsidiaries as of December 31, 2001 and 2000, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States.


ARTHUR ANDERSEN LLP
Minneapolis, Minnesota
January 24, 2002

PAGE 57 UnitedHealth Group



CORPORATE AND BUSINESS LEADERS

UNITEDHEALTH GROUP

WILLIAM W. MCGUIRE, MD
Chairman and Chief Executive Officer

STEPHEN J. HEMSLEY
President and Chief Operating Officer

PATRICK J. ERLANDSON
Chief Financial Officer

DAVID J. LUBBEN
General Counsel

JEANNINE M. RIVET
Executive Vice President

JAMES B. HUDAK
Chief Executive Officer
UnitedHealth Technologies

REED V. TUCKSON, MD
Senior Vice President
Consumer Health and
Medical Care Advancement

L. ROBERT DAPPER
Senior Vice President
Human Capital

JOHN S. PENSHORN
Director of Capital Markets Communications and Strategy

UNITEDHEALTHCARE

ROBERT J. SHEEHY
Chief Executive Officer

OVATIONS

LOIS QUAM
Chief Executive Officer

UNIPRISE

R. CHANNING WHEELER
Chief Executive Officer

SPECIALIZED CARE SERVICES

RONALD B. COLBY
Chief Executive Officer

INGENIX

JEANNINE M. RIVET
Chief Executive Officer


BOARD OF DIRECTORS


WILLIAM C. BALLARD, JR.
Of Counsel
Greenebaum, Doll & McDonald
Louisville, Kentucky, law firm

RICHARD T. BURKE
Former Chief Executive Officer
and Governor
Phoenix Coyotes
National Hockey League team

STEPHEN J. HEMSLEY
President and
Chief Operating Officer
UnitedHealth Group

JAMES A. JOHNSON
Vice Chairman
Perseus, LLC
Private merchant banking
and investment firm

THOMAS H. KEAN
President
Drew University

DOUGLAS W. LEATHERDALE
Former Chairman and
Chief Executive Officer
The St. Paul Companies, Inc.
Insurance and related services

WILLIAM W. MCGUIRE, MD
Chairman and
Chief Executive Officer
UnitedHealth Group

WALTER F. MONDALE
Partner
Dorsey & Whitney LLP
Minneapolis, Minnesota, law firm

MARY O. MUNDINGER, RN, DRPH
Dean and Centennial Professor in Health Policy, School of Nursing, and Associate
Dean, Faculty of Medicine Columbia University

ROBERT L. RYAN
Senior Vice President and
Chief Financial Officer
Medtronic, Inc.
Medical technology company

DONNA E. SHALALA, PHD
President
University of Miami

WILLIAM G. SPEARS
Managing Partner
Spears Grisanti &
Brown LLC
New York City-based investment
counseling and management firm

GAIL R. WILENSKY, PHD
Senior Fellow
Project HOPE
International health foundation

AUDIT COMMITTEE

WILLIAM C. BALLARD, JR.
JAMES A. JOHNSON
DOUGLAS W. LEATHERDALE
ROBERT L. RYAN

COMPENSATION AND HUMAN RESOURCES COMMITTEE

THOMAS H. KEAN
MARY O. MUNDINGER
WILLIAM G. SPEARS

COMPLIANCE AND GOVERNMENT AFFAIRS COMMITTEE

RICHARD T. BURKE
WALTER F. MONDALE
GAIL R. WILENSKY

EXECUTIVE COMMITTEE

WILLIAM C. BALLARD, JR.
DOUGLAS W. LEATHERDALE
WILLIAM W. MCGUIRE
WILLIAM G. SPEARS

NOMINATING COMMITTEE

WILLIAM C. BALLARD, JR.
THOMAS H. KEAN
DOUGLAS W. LEATHERDALE
WILLIAM W. MCGUIRE
WILLIAM G. SPEARS

PAGE 58 UnitedHealth Group



FINANCIAL PERFORMANCE AT A GLANCE



GROWTH & PROFITS -- CONSOLIDATED(1)
(in millions, except per share data)                             2001                 2000                1999
- ---------------------------------------------------------------------------------------------------------------
                                                                                             
Revenues                                                     $ 23,454             $ 21,122            $ 19,562
Continuing Markets Revenue Growth Rate                             15%                  12%                 13%

Earnings From Operations                                     $  1,566             $  1,200            $    943
Operating Margin                                                  6.7%                 5.7%                4.8%
Return on Net Assets                                             30.7%                25.5%               19.8%

Net Earnings                                                 $    913             $    705            $    563
Net Margin                                                        3.9%                 3.3%                2.9%

Diluted Net Earnings per Share                               $   2.79             $   2.10            $   1.59




GROWTH & PROFITS -- BY SEGMENT
(in millions)                                                    2001                 2000                 1999
- ---------------------------------------------------------------------------------------------------------------
                                                                                              
HEALTH CARE SERVICES
  Revenues                                                   $  20,494              $18,696            $ 17,581
  Earnings From Operations                                   $     944              $   739            $    578
  Operating Margin                                                4.6%                  4.0%                3.3%
  Return on Net Assets                                           29.2%                 24.6%               20.6%
UNIPRISE
  Revenues                                                   $  2,462               $ 2,140            $  1.865
  Earnings From Operations                                   $    374               $   289            $    222
  Operating Margin                                              15.2%                  13.5%               11.9%
  Return on Net Assets                                          37.2%                  30.6%               22.6%
SPECIALIZED CARE SERVICES
  Revenues                                                   $ 1,254                $   974            $    726
  Earnings From Operations                                   $   214                $   174            $    128
  Operating Margin                                              17.1%                  17.9%               17.6%
  Return on Net Assets                                          59.1%                  68.8%               80.0%
INGENIX
  Revenues                                                   $   447                $   375            $    258
  Earnings From Operations                                   $    48                $    32            $     25
  Operating Margin                                              10.7%                   8.5%                9.7%
  Return on Net Assets                                           7.5%                   5.2%                5.4%





CAPITAL ITEMS
(in millions, except per share data)                             2001                 2000                 1999
- ---------------------------------------------------------------------------------------------------------------
                                                                                             
Cash Flows From Operating Activities                         $ 1,844              $  1,521            $ 1,189

Capital Expenditures                                         $   425              $    245            $   196

Consideration Paid or Issued for Acquisitions                $   255              $     76            $   334

Debt to Total Capital                                           28.9%                 24.7%              20.4%

Return on Shareholders' Equity                                  24.5%                 19.0%              14.1%

Year-End Market Capitalization                               $21,841              $ 19,470            $ 8,896

Year-End Common Share Price                                  $ 70.77              $  61.38            $ 26.56

- -------------------------------------------------------------------------------

(1) Excludes nonrecurring items in 1999 and 2000, as described in footnotes 1
    and 2 at the bottom of page 22.

PAGE 59 UnitedHealth Group



INVESTOR INFORMATION

MARKET PRICE OF COMMON STOCK
The following table shows the range of high and low sales prices for the
company's stock as reported on the New York Stock Exchange for the calendar
periods shown through February 25, 2002. These prices do not include commissions
or fees associated with purchasing or selling this security.



                                  HIGH         LOW
- ----------------------------------------------------
                                       
2002
First Quarter
   Through February 25, 2002     $75.75      $ 68.52
- ----------------------------------------------------

2001
First Quarter                    $64.36       $50.50
Second Quarter                   $67.40       $52.50
Third Quarter                    $70.00       $58.80
Fourth Quarter                   $72.80       $62.42
- ----------------------------------------------------

2000
First Quarter                    $32.33       $23.18
Second Quarter                   $44.50       $28.88
Third Quarter                    $50.56       $39.06
Fourth Quarter                   $63.44       $48.63
- ----------------------------------------------------


As of February 25, 2002, the company had 12,970 shareholders of record.

ACCOUNT QUESTIONS
Our transfer agent, Wells Fargo, can help you with a variety of
shareholder-related services, including:
     Change of address
     Lost stock certificates
     Transfer of stock to another person
     Additional administrative services

You can call our transfer agent at (800) 468-9716 or locally at (651) 450-4064.

You can write them at:
     Wells Fargo Shareowner Services
     P.O. Box 64854
     Saint Paul, Minnesota 55164-0854

Or you can e-mail our transfer agent at:
     stocktransfer@wellsfargo.com

INVESTOR RELATIONS
You can contact UnitedHealth Group Investor Relations any time to order, without
charge, financial documents, such as the annual report and Form 10-K. You can
write to us at:
     Investor Relations, MN008-T930
     UnitedHealth Group
     P.O. Box 1459
     Minneapolis, Minnesota 55440-1459

ANNUAL MEETING
We invite UnitedHealth Group shareholders to attend our annual meeting, which
will be held on Wednesday, May 15, 2002, at 10 a.m., at UnitedHealth Group
Center, 9900 Bren Road East, Minnetonka, Minnesota.

DIVIDEND POLICY
UnitedHealth Group's dividend policy was established by its board of directors
in August 1990. The policy requires the board to review the company's audited
financial statements following the end of each fiscal year and decide whether it
is advisable to declare a dividend on the outstanding shares of common stock.

     Shareholders of record on April 2, 2001, received an annual dividend for
2001 of $0.03 per share. On February 12, 2002, the board of directors approved
an annual dividend for 2002 of $0.03 per share. The dividend will be paid on
April 17, 2002, to shareholders of record at the close of business on April 1,
2002.

STOCK LISTING
The company's common stock is traded on the New York Stock Exchange under the
symbol UNH.

INFORMATION ONLINE
You can view our annual report and obtain more information about UnitedHealth
Group and its businesses via the Internet at:

     www.unitedhealthgroup.com

EX-21

                                                                   EXHIBIT 21
                         SUBSIDIARIES OF THE REGISTRANT



                                                                     STATE OF
                       NAME OF ENTITY                             INCORPORATION              SUBSIDIARY OF WHAT ENTITY
- --------------------------------------------------------------- ------------------ -----------------------------------------------
                                                                             
Ingenix, Inc.                                                   Delaware           UnitedHealth Group Incorporated
Reden & Anders, Ltd.                                            Minnesota          Ingenix, Inc.
Subrogation Advantage, Ltd.                                     Minnesota          Ingenix, Inc.
Ingenix Publishing, Inc.                                        Delaware           Ingenix, Inc.
Ingenix Health Intelligence, L.L.C.                             Delaware           Ingenix Publishing, Inc.
Ingenix Pharmaceutical Services, Inc.                           Delaware           Ingenix, Inc.
Ingenix International (Canada), Inc.                            Canada             Ingenix Pharmaceutical Services, Inc.
Ingenix Services, Inc.                                          Delaware           Ingenix Pharmaceutical Services, Inc.
Ingenix Pharmaceutical Services (Deutschland) GmbH              Germany            Ingenix Pharmaceutical Services, Inc.
Ingenix International (Hong Kong) Limited                       Hong Kong          Ingenix Pharmaceutical Services, Inc.
Ingenix Pharmaceutical Services Holdings, Inc.                  Delaware           Ingenix Pharmaceutical Services, Inc.
ClinPharm International Limited                                 United Kingdom     Ingenix Pharmaceutical Services Holdings, Inc.
Ingenix Pharmaceutical Services (UK) Limited                    United Kingdom     ClinPharm International Limited
Ingenix Pharmaceutical Services (Spain) SL                      Spain              Ingenix Pharmaceutical Services (UK) Limited
Ingenix Pharmaceutical Services (Australia) Pty Ltd             Australia          Ingenix Pharmaceutical Services (UK) Limited
Ingenix International (Italy) s.r.l.                            Italy              Ingenix Pharmaceutical Services (UK) Limited
ClinPharm International SARL                                    France             Ingenix Pharmaceutical Services (UK) Limited
Worldwide Clinical Trials SARL                                  France             ClinPharm International SARL
Ingenix Pharmaceutical Services, LLC                            Delaware           Ingenix Pharmaceutical Services Holdings, Inc.
InSite Clinical Trials LLC                                      Delaware           Ingenix Pharmaceutical Services Holdings, Inc.
CT Management, Inc.                                             California         Ingenix Pharmaceutical Services Holdings, Inc.
ICT (UK) Limited                                                United Kingdom     Ingenix Pharmaceutical Services Holdings, Inc.
Ingenix International (Australia) Pty Limited                   Australia          Ingenix Pharmaceutical Services Holdings, Inc.
Ingenix International (Netherlands) BV                          Netherlands        Ingenix Pharmaceutical Services Holdings, Inc.
Ingenix Pharmaceutical Services (Sweden) AB                     Sweden             Ingenix Pharmaceutical Services Holdings, Inc.
Ingenix Pharmaceutical Services de Argentina S.R.L.             Argentina          Ingenix Pharmaceutical Services Holdings, Inc.
Ingenix International (Czech Republic), s.r.o.                  Czechoslovakia     Ingenix Pharmaceutical Services Holdings, Inc.
Worldwide Clinical Trials, SL                                   Spain              Ingenix Pharmaceutical Services Holdings, Inc.
Ingenix International (Hungary) Ltd.                            Hungary            Ingenix Pharmaceutical Services Holdings, Inc.
Ingenix Pharmaceutical Services (RSA) Proprietary Limited       South Africa       Ingenix Pharmaceutical Services Holdings, Inc.
Ingenix International (Finland) Oy                              Finland            Ingenix Pharmaceutical Services Holdings, Inc.
Ingenix International (UK) Limited                              United Kingdom     Ingenix Pharmaceutical Services Holdings, Inc.
UnitedHealthcare International Asia, LLC                        Delaware           UnitedHealth Group Incorporated
UnitedHealthcare International Malaysia Sdn. Bhd.               Malaysia           UnitedHealthcare International Asia, LLC
UnitedHealthcare Asia Limited                                   Hong Kong          UnitedHealthcare International Asia, LLC
United HealthCare (Deutschland) GmbH                            Germany            UnitedHealth Group Incorporated
Philam Care Health Systems, Inc.                                Philippines        UnitedHealth Group Incorporated
AIG United HealthCare LLC                                       Delaware           UnitedHealth Group Incorporated
AIA United HealthCare Limited                                   Hong Kong          AIG United HealthCare LLC
H&W Indemnity, Ltd.                                             Caymans            UnitedHealth Group Incorporated
UHC International Holdings, Inc.                                Delaware           UnitedHealth Group Incorporated
UHC International Services, Inc.                                Delaware           UnitedHealth Group Incorporated
UnitedHealthcare International Inc.                             Delaware           UnitedHealth Group Incorporated
United Healthcare International Mauritius Limited               Maruitius          UnitedHealth Group Incorporated
Sedgewick Parekh Health Management (Private) Limited            India              United Healthcare International Mauritius Limited
UnitedHealth Group Finance Company, Inc.                        Delaware           UnitedHealth Group Incorporated
Asia Services, LLC                                              Delaware           UnitedHealth Group Finance Company, Inc.
Ovations, Inc.                                                  Delaware           United HealthCare Services, Inc.
Evercare of New York, IPA, Inc.                                 New York           Ovations, Inc.
Optage, LLC                                                     Delaware           Ovations, Inc.
The Ovations Press, Inc.                                        Delaware           Ovations, Inc.
The Ovations Press/Wurman, L.L.C.                               Delaware           The Ovations Press, Inc.
Lifemark Corporation                                            Delaware           Ovations, Inc.
Arizona Health Concepts, Inc.                                   Arizona            Lifemark Corporation


                                                                     Page 1 of 3







                                                                      EXHIBIT 21
                         SUBSIDIARIES OF THE REGISTRANT




                                                                    STATE OF
                        NAME OF ENTITY                            INCORPORATION                 SUBSIDIARY OF WHAT ENTITY
- --------------------------------------------------------------- ------------------ -----------------------------------------------
                                                                             
Evercare at Home, Inc.                                          Arizona            Lifemark Corporation
Evercare of Arizona, Inc.                                       Arizona            Lifemark Corporation
Evercare Connections, Inc.                                      Delaware           Lifemark Corporation
Lifemark Care Management, Inc.                                  Delaware           Lifemark Corporation
Lifemark Government Services, LLC                               Indiana            Lifemark Care Management, Inc.
Lifemark New York, Inc.                                         Delaware           Lifemark Corporation
Lifemark at Home NY, Inc.                                       New York           Lifemark Corporation
MCS HP New York, LLC                                            New York           Lifemark Corporation
Evercare of Texas, L.L.C.                                       Texas              Lifemark Corporation
Lifemark Healthplans of Delaware, Inc.                          Delaware           Lifemark Corporation
Uniprise, Inc.                                                  Delaware           United HealthCare Services, Inc.
United HealthCare Service Corp.                                 New York           Uniprise, Inc.
United HealthCare (Ireland) Limited                             Ireland            Uniprise, Inc.
Charter Oak HealthCare Services, Inc.                           Delaware           Uniprise, Inc.
United Healthcare Services, Inc.                                Minnesota          UnitedHealth Group Incorporated
UnitedHealthcare, Inc.                                          Delaware           United HealthCare Services, Inc.
United HealthCare of Alabama, Inc.                              Alabama            United HealthCare, Inc.
United HealthCare of Arizona, Inc.                              Arizona            United HealthCare, Inc.
Arizona Physicians IPA, Inc.                                    Arizona            United HealthCare of Arizona, Inc.
United HealthCare of Arkansas, Inc.                             Arkansas           United HealthCare, Inc.
United HealthCare of Colorado, Inc.                             Colorado           United HealthCare, Inc.
United HealthCare of Florida, Inc.                              Florida            United HealthCare, Inc.
United HealthCare of Georgia, Inc.                              Georgia            United HealthCare, Inc.
United HealthCare of Illinois, Inc.                             Delaware           United HealthCare, Inc.
United HealthCare of Louisiana, Inc.                            Louisiana          United HealthCare, Inc.
United HealthCare of the Mid-Atlantic, Inc.                     Maryland           United HealthCare, Inc.
United HealthCare of the Midlands, Inc.                         Nebraska           United HealthCare, Inc.
United HealthCare of the Midwest, Inc.                          Missouri           United HealthCare, Inc.
United HealthCare of Mississippi, Inc.                          Mississippi        United HealthCare, Inc.
United HealthCare of Nevada, Inc.                               Nevada             United HealthCare, Inc.
United HealthCare of New Jersey, Inc.                           New Jersey         United HealthCare, Inc.
United HealthCare of New York, Inc.                             New York           United HealthCare, Inc.
United HealthCare of North Carolina, Inc.                       North Carolina     United HealthCare, Inc.
United HealthCare of Tennessee, Inc.                            Tennessee          United HealthCare, Inc.
United HealthCare of Texas, Inc.                                Texas              United HealthCare, Inc.
United HealthCare of Utah                                       Utah               United HealthCare, Inc.
United HealthCare of Wisconsin, Inc.                            Wisconsin          United HealthCare, Inc.
United HealthCare Network, Inc.                                 Alabama            United HealthCare, Inc.
United HealthCare of Upstate New York, Inc.                     New York           United HealthCare, Inc.
Unified Limited                                                 United Kingdom     United HealthCare Services, Inc.
United HealthCare of New England, Inc.                          Rhode Island       United HealthCare Services, Inc.
United HealthCare of Ohio, Inc.                                 Ohio               United HealthCare Services, Inc.
United HealthCare of Oregon, Inc.                               Oregon             United HealthCare Services, Inc.
United HealthCare Plans of Puerto Rico, Inc.                    Puerto Rico        United HealthCare Services, Inc.
United HealthCare Networks, Inc.                                Delaware           United HealthCare Services, Inc.
UnitedHealth Capital, LLC                                       Delaware           United HealthCare Services, Inc.
Commonwealth Physicians Services Corporation                    Kentucky           United HealthCare Services, Inc.
United HealthCare of Minnesota, Inc.                            Minnesota          United HealthCare Services, Inc.
United HealthCare of Washington, Inc.                           Washington         United HealthCare Services, Inc.
UnitedHealth Financial Services, Inc.                           Delaware           United HealthCare Services, Inc.
Exante Bank, Inc.                                               Utah               UnitedHealth Financial Services, Inc.
United HealthCare of Kentucky, Ltd.                             Kentucky           United HealthCare Services, Inc.


                                                                     Page 2 of 3






                                                                   EXHIBIT 21
                         SUBSIDIARIES OF THE REGISTRANT




                                                                    STATE OF
                        NAME OF ENTITY                            INCORPORATION                 SUBSIDIARY OF WHAT ENTITY
- --------------------------------------------------------------- ------------------ ----------------------------------------------
                                                                             
Specialized Care Services, Inc.                                 Delaware           United HealthCare Services, Inc.
Optum Group, LLC                                                Delaware           Specialized Care Services, Inc.
Coordinated Vision Care, Inc.                                   Delaware           Specialized Care Services, Inc.
Coordinated Vision Care of New York, IPA, Inc.                  New York           Coordinated Vision Care, Inc.
Unimerica Insurance Company                                     Maryland           Specialized Care Services, Inc.
United Resource Networks, Inc.                                  Delaware           Specialized Care Services, Inc.
Specialty Resource Services, Inc.                               Delaware           United Resource Networks, Inc.
National Benefit Resources, Inc.                                Minnesota          Specialized Care Services, Inc.
Stop-Loss Life Reinsurance Company                              Arizona            National Benefit Resources, Inc.
Spectera, Inc.                                                  Maryland           Specialized Care Services, Inc.
Spectera Vision Services of California, Inc.                    California         Specialized Care Services, Inc.
Spectera Vision Services of Florida, Inc.                       Florida            Specialized Care Services, Inc.
Spectera Insurance Company                                      Maryland           Specialized Care Services, Inc.
Spectera Eyecare of North Carolina, Inc.                        North Carolina     Specialized Care Services, Inc.
Spectera Insurance Company, Inc.                                Texas              Specialized Care Services, Inc.
Spectera Vision, Inc.                                           Virginia           Specialized Care Services, Inc.
Group Vision Associates, Inc.                                   Pennsylvania       Specialized Care Services, Inc.
American Chiropractic Network, Inc.                             Minnesota          United HealthCare Services, Inc.
Managed Physical Network, Inc.                                  New York           American Chiropractic Network, Inc.
Managed Physical Network IPA of New York, Inc.                  New York           American Chiropractic Network, Inc.
American Chiropractic Network IPA of New York, Inc.             New York           American Chiropractic Network, Inc.
Dental Benefit Providers, Inc.                                  Delaware           United HealthCare Services, Inc.
Dental Benefit Providers of California, Inc.                    California         Dental Benefit Providers, Inc.
Dental Benefit Providers of Illinois, Inc.                      Illinois           Dental Benefit Providers, Inc.
Dental Benefit Providers of New Jersey, Inc.                    New Jersey         Dental Benefit Providers, Inc.
Dental Insurance Company of America                             New York           Dental Benefit Providers, Inc.
DBP-KAI, Inc.                                                   New York           Dental Benefit Providers, Inc.
Dental Benefit Providers of Maryland, Inc.                      Maryland           Dental Benefit Providers, Inc.
Dental Benefit Services of Illinois, Inc. (non-profit)          Illinois           Dental Benefit Providers, Inc.
United Behavioral Health                                        California         United HealthCare Services, Inc.
U.S. Behavioral Health Plan, California (Knox Keene)            California         United Behavioral Health
Behavioral Health Administrators                                California         United Behavioral Health
United Behavioral Health of New York, I.P.A., Inc.              New York           United Behavioral Health
Working Solutions, Inc.                                         Oregon             United Behavioral Health
Unimerica, Inc.                                                 Delaware           United HealthCare Services, Inc.
United HealthCare Insurance Company (Ins.)                      Connecticut        Unimerica, Inc.
Clarite, LLC                                                                       United HealthCare Insurance Company (Ins.)
The MetraHealth Employee Benefits Company, Inc.                                    United HealthCare Insurance Company (Ins.)
The MetraHealth Care Network, Inc.                                                 The MetraHealth Employee Benefits Company, Inc.
MetraHealth Care Management Corporation                         Delaware           United HealthCare Insurance Company (Ins.)
United HealthCare of California, Inc.                           California         MetraHealth Care Management Corporation
United HealthCare Insurance Company of Illinois (Ins.)          Illinois           United HealthCare Insurance Company (Ins.)
United HealthCare Insurance Company of New York (Ins.)          New York           United HealthCare Insurance Company (Ins.)
United HealthCare Insurance Company of Ohio (Ins.)              Ohio               United HealthCare Insurance Company (Ins.)
United HealthCare Life Insurance Company of New York            New York           United HealthCare Insurance Company (Ins.)
United HealthCare Products, LLC                                 Delaware           United HealthCare Insurance Company (Ins.)
United HealthCare Service LLC                                   Delaware           United HealthCare Insurance Company (Ins.)




                                                                     Page 3 of 3

EX-23

                                                                      EXHIBIT 23


CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS


As independent public accountants, we hereby consent to the incorporation of our
report dated January 24, 2002, incorporated by reference in this Form 10-K, into
the Company's previously filed Registration Statement File Nos. 2-95342,
33-3558, 33-22310, 33-27208, 33-36579, 33-50282, 33-59083, 33-59623, 33-63885,
33-67918, 33-68300, 33-75846, 33-79632, 33-79634, 33-79636, 33-79638, 333-01517,
333-01915, 333-02525, 333-04401, 333-04875, 333-05291, 333-05717, 333-06533,
333-25923, 333-27277, 333-41661, 333-44569, 333-44613, 333-45289, 333-45319,
333-50461, 333-55777, 333-66013, 333-71007, 333-81337, 333-87243, 333-90247,
333-46284 and 333-55666.


/s/ ARTHUR ANDERSEN LLP


Minneapolis, Minnesota,
April 1, 2002

EX-24

                                                                      EXHIBIT 24

                                POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints William W. McGuire, M.D., Stephen J.
Hemsley, and David J. Lubben, and each of them, his or her true and lawful
attorneys-in-fact and agents, each acting alone, with full power of substitution
and resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities, to sign an Annual Report on Form 10-K for the year ended
December 31, 2001 for UnitedHealth Group Incorporated, and any and all
amendments thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, each acting alone, or his
or her substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.

Dated: February 12, 2002


 /s/ William C. Ballard                     /s/ Walter F. Mondale
- -----------------------------------        ------------------------------------
William C. Ballard, Jr.                     Walter F. Mondale


 /s/ Richard T. Burke, Sr.                  /s/ Mary O'Neil Mundinger
- -----------------------------------        ------------------------------------
Richard T. Burke, Sr.                       Mary O'Neil Mundinger


 /s/ Stephen J. Hemsley                     /s/ Robert L. Ryan
- -----------------------------------        ------------------------------------
Stephen J. Hemsley                          Robert L. Ryan


 /s/ James A. Johnson                       /s/ Donna E. Shalala
- -----------------------------------        ------------------------------------
James A. Johnson                            Donna E. Shalala


 /s/ Thomas H. Kean
- -----------------------------------        ------------------------------------
Thomas H. Kean                              William G. Spears


 /s/ Douglas W. Leatherdale                 /s/ Gail R. Wilensky
- -----------------------------------        ------------------------------------
Douglas W. Leatherdale                     Gail R. Wilensky


/s/ William W. McGuire
- -----------------------------------
William W. McGuire, M.D.

EX-99

                                                                      EXHIBIT 99


April 1, 2002

Securities and Exchange Commission
Washington, D.C. 20549

Re: Arthur Andersen LLP ("Andersen") Representations

In connection with Andersen's audit of the consolidated financial statements of
UnitedHealth Group Incorporated and its subsidiaries for the year ended December
31, 2001, Andersen has represented to UnitedHealth Group that its audit was
subject to Andersen's quality control system for the U.S. accounting and
auditing practice to provide reasonable assurance that the engagement was
conducted in compliance with professional standards and that there was
appropriate continuity of Andersen personnel working on the audit and
availability of national office consultation. Availability of personnel at
foreign affiliates of Andersen is not relevant to this audit.


                                            UnitedHealth Group Incorporated

                                            By: /s/ Patrick J. Erlandson
                                               --------------------------------
                                               Chief Financial Officer